What is Debt Consolidation?
Debt consolidation is when you refinance all your existing credit card debts and/or personal loan debts into one single repayment. In other words, it means a lender will pay off all your existing debts so instead of having to make lots of small repayments to lots of different lenders you simply make one repayment to one lender. Simple.
Now let’s take a good look at debt consolidation Australia, and discuss a few of the key points.
A debt consolidation loan is used to pay-off multiple debts with the intention of combining them into one, single loan. This includes credit card debt, secured and unsecured personal loans, payday loans, tax debt and outstanding bills. Before taking out a debt consolidation loan it could be worthwhile checking:
- (1) The interest rate on the debt consolidation loan will be lower than that on your combined existing debts.
- (2) The repayment amount on the debt consolidation loan works for you. There’s no point in consolidating your debts if you can’t manage the new scheduled repayment amount. To find a repayment amount that works for you, check what loan terms are offered by the lender. Typically, the longer the loan term the lower the repayment amount. OurMoneyMarket offers flexible loan terms ranging from 1 to 7 years.
- (3) If there are any break fees associated with your existing loans.
So what are the benefits of debt consolidation?
#1 One Simple Repayment
Staying on top of your personal finances can be a challenge at the best of times, let alone when life gets busy. For those of us with multiple credit cards and the odd car loan or personal loan, it doesn’t get any easier – especially when all these repayments are due on different days. Debt consolidation can help simplify “life admin” by consolidating all these debts into one easy to manage repayment. This can help reduce the stress of managing your personal finances, plus in the long-run help improve your credit record by making sure you don’t miss a repayment.
#2 Pay Less Interest and Lower the Amount of Your Repayment
Debt consolidation can help reduce the amount of interest you pay and possibly lower the amount of your regular repayment. For example, by refinancing the outstanding balance on a high interest rate credit card to a lower rate personal loan, you can save thousands! Check out our example below What’s more a lower interest rate can mean a lower regular repayment amount. This means not only could you save enough money for your next big trip, but you could also have far less stress when it comes to managing your monthly budget.
#3 Set Yourself a Debt-Free Date
Consolidating your debts into one fixed rate personal loan means you’re setting yourself a clear date in which all your debts will be paid off! Unlike with your credit cards where you’re only required to make a minimum repayment. However with a personal loan there is a fixed repayment that includes both an interest component and principal component that goes towards paying off the balance of your loans.
If you interested in obtaining a debt consolidation loan, you can either apply for personal loans here or contact us via email on firstname.lastname@example.org or phone us on 1300 990 115.
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Source: OurMoneyMarket Lending Pty Ltd ABN 64 605 231 669 Australian Credit Licence 488228.