Debt consolidation is one way of solving a multiple debt situation, and, as you would expect, there are several types of debt consolidation loans, each with its own pros and cons. If you have several monthly loan repayments to make and are finding it difficult to make the payments, debt consolidation might just be the answer.
This is often referred to as credit counselling, whereby a debt management plan (DM) is put together. The credit counsellor will negotiate some concessions, such as lower interest rates and financial penalties with your creditors, and this leaves you with a single affordable monthly payment. This type of consolidation loan doesn’t work for everyone, and you really need to consult with a financial expert, who can examine your circumstances and decide which plan is the most suitable. This is a form of legally binding agreement, and once you have entered into the contract, your creditors cannot ask for any more than the sum you agreed to when signing the debt plan.
A Debt Consolidation Loan
This is the package that most people opt for, and quite simply involves borrowing a specific sum of money that is equal to the total amount owed, and with all your creditors paid in full, you are left with a single monthly payment that is affordable. There are even loan providers who will accept debt consolidation loans for bad credit, which is ideal if you have a less than perfect credit score. If you would like to know more about a debt consolidation loan and you live in Australia, a Google search will lead you to a leading online loan company who can make all the preparations. Of course, once you have paid off all your debts, it is a good idea to close any avenues of credit, otherwise you could easily find yourself in a similar situation.
Credit Card Balance Transfers
If, for example, a person has several credit cards, each with a different interest rates, it might be worthwhile transferring some of your credit from one of the higher interest cards to a lower one. This all depends on how much of a credit limit you have on the cards, and it might not be a suitable solution for everyone. One must take care that this doesn’t lead to even more problems, as you have to borrow from one card to pay for another, which is the start of serious problems.
Fortunately, there are online loan providers that specialize in debt consolidation, even for those with a bad credit score, and with the help of an expert loan provider, you can soon find yourself debt-free and ready to look for investment opportunities. Rather than waiting for things to get out of hand, an online search is the easiest way to source a suitable loan provider who can probably help you, and with an online search, you can soon be discussing your situation with an expert.