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Most of us have seen the myriad of debt consolidation advertisements on TV. There is a considerable amount of competition in the debt consolidation market because unfortunately, lots of people are struggling financially and these businesses provide much needed financial relief. Mortgages, car loans, credit cards; people can attain loans from a huge range of lenders for pretty much anything in today times. The challenge is that all these loans are tough to manage and if you fall behind in your monthly repayments, you can find yourself in a lot of trouble.

The idea behind debt consolidation is that you can bring each of your existing debts together and consolidate them into one, easy to handle loan that is simpler and gives you a far clearer understanding of your financial future. For some people, there are a variety of advantages in consolidating your debts, and this article will explore debt consolidation thoroughly and the benefits they provide to give you a better understanding if debt consolidation is a good choice for your financial position.

The Basics

Debt consolidation enables you to pay off all your current debts with a new loan that generally has different (and in most cases more enticing) interest rates and terms. There are numerous reasons that people use debt consolidation services.

High-Interest Rates

All loans have differing interest rates and terms and conditions, however, credit cards most certainly have the highest interest rates of all loans. While credit card companies normally have a no interest period of about a couple of months, the interest rates after this time can skyrocket up to 25% or higher. If you find yourself in a situation where you’re paying 25% interest on your credit card loans, it’s highly likely that your debt will grow much faster than you’re able to pay it off. Commonly, debt consolidation can provide lower interest rates and better terms, which can save you a considerable amount of money in the long-term.

Too much confusion with multiple loans.

When you have several debts with varied interest rates and minimum repayments that are due at different times, there’s no doubt that it can be hard to manage and can become confusing at times. This increases the risk of missing a repayment which can give you a poor credit report. Debt consolidation considerably helps in this scenario by combining all of your debts into one which is much easier to handle and gives you a clearer picture of when you’ll be debt free.

High Monthly Repayments

When people are facing multiple debts, it’s very difficult to manage your cash flow due to the high minimum repayments required for each debt. On top of this, different debts have different repayment dates and this can cause individuals to struggle just to make ends meet. If you miss a repayment because you simply don’t have the money in the bank, your interest rates are likely to be increased, you can get a bad credit report, and your financial position can go south considerably quickly. Debt consolidation loans provide one repayment every month, and you can arrange your monthly repayment amounts based on the length of time you wish your loan to be.

With that being said, if you’re interested in consolidating your debts, it’s necessary that you undertake suitable research to find the best debt consolidation interest rates and terms and conditions. You’ll discover a vast range of debt consolidation companies, some are good, some are bad, and some are straight-out predatory. First of all, you’ll want to choose a debt consolidation company that has lower interest rates and fees than all your current debts. You’ll also need to look over the terms and conditions vigilantly. Certain consolidation loans can be secured against your home or other assets, and you may be required to pay additional fees like application fees, legal fees, stamp duty and valuation. The reality is, there is a considerable amount of homework that needs to be done before you can figure out if debt consolidation is the right option for you.

As you can obviously see, there are a range of benefits related to debt consolidation for individuals that are struggling financially. Lower interest rates and fees, lower monthly repayments, and less confusion with multiple debts can save you a considerable amount of money in the long-run, and it’s perhaps better for your emotional wellbeing too. This article isn’t aimed to convince you to consolidate your debts, as it all depends upon your financial condition. As a result of the complexity and the numerous variables to consider, it’s highly recommended that you seek professional advice so you can at least get an idea of what option is best for you if you’re experiencing financial difficulty. In some circumstances, declaring bankruptcy is a better option, so before you make any decisions about your financial future, contact Bankruptcy Experts Tweed Coast on 1300 795 575 or visit their website for more information: www.bankruptcyexpertstweedcoast.com.au