Why you would need debt consolidation:
If you have a number of debts that you need to pay off, it can be quite challenging having to keep up with all of them. Having various small debts can be expensive and it can be complicated to keep on top of all the repayments.
Debt consolidation can be helpful for if you are drowning in debt.
How debt consolidation works:
You can only qualify for debt consolidation if you are considered to be over-indebted. This means that you are struggling to repay multiple debts and your credit record is in danger of becoming impaired.
You can approach a financial institution that offers debt consolidation. You are able to combine multiple debts into a single monthly instalment.
It’s important to keep in mind that a lower monthly payment means that you’ll pay more interest in the long run.
You may get a lower interest rate too, but this isn’t always the case.
Your monthly debts are combined into a single payment that you need to make every month. This can have a positive effect, as it can help you to get control of your finances. You won’t have trouble keeping up with multiple payments anymore either. You can keep track of just one monthly payment.
By opting for debt consolidation you can save as much as 20% a month.
A common method used by many people is to consolidate debt through their home loan. To be able to consolidate your debts into your home loan you need to have equity in your property.
Keep in mind that lenders also take into account other factors, such as your income and your credit history, when deciding whether you are over-indebted or not.
By consolidating your debt you can get a fresh start.