What You Need to Know About Debt Consolidation
When you have multiple debts, it’s not only a challenging task to keep them under control, it can become a big stress on you and your family. Managing different interest rates, as well as varying minimum repayment amounts and repayment due dates, can be overwhelming and most of all, expensive. If you’re holding debts with a number of different creditors, that only complicates matters further.
Rolling your debt into one single loan could be the right option for you if you’re juggling multiple debts, particularly if it’s credit card debt.
Taking out a personal loan is usually the most common way to consolidate debts. Personal loans can be more affordable and easier to manage and they generally have a lower interest rate compared to credit cards. On top of paying less interest, you could save money on monthly fees.
Here’s three advantages of debt consolidation:
- What you repay each month on your loan might be reduced by bringing all your debt under a single, lower interest rate.
- By consolidating your debt into one loan, you can improve your credit rating, if you meet your monthly repayments on time. Your credit rating will further improve as you pay off your debt.
- If you’re paying off credit cards, it could be wise to consider closing the accounts once you consolidate your debt to avoid new charges. Keeping accounts open after consolidation puts you at risk of running up even more debt.
As with all loans, you need to go through an application process for debt consolidation. And there are a few things you need to consider, such as: finding the right loan option, finding the right lender and outlining an achievable payment plan to make sure you can afford your monthly repayments.
As with all your financial needs, the Loan Market team are here to help. If you think it’s the right option for you, we can help you navigate through the consolidation process and find you the loan that suits your circumstances.