Debt consolidation offers you the opportunity to combine all your existing credit balances into a single, cheaper monthly repayment – for more financial freedom in everyday life!
A consolidation loan bundles all of your existing debts into one affordable monthly rate
When you have multiple loans and credit agreements it can become very difficult to manage not only in terms of repayment but also in terms of affordability.
A debt consolidation loan ensures that you are able to properly manage and pay off your debts.
Debt Consolidation in South Africa
If you are having trouble managing and repaying your debt, you need to come up with an effective solution ASAP. Debt Consolidation can help you get a grip on your debts and finances quickly and easily.
All open balances of personal loans and credit cards are combined in one account. That way, you can make a single smaller monthly payment, saving you money and reducing your risk of default.
The debt consolidation strategy is to get a lower interest rate on the consolidation loan than you would pay on all of your smaller loans.
Debt Consolidation Using Credit Cards
One of the great advantages of debt consolidation is that it is flexible. This can be done in a number of ways to precisely cater to the needs of borrowers. One of the simplest techniques is to use a credit card with 0% interest. This card can be used to transfer all of your outstanding credit card balances to automatically eliminate interest payments. You can achieve the highest possible savings by repaying your debts in full before the 0% interest period has expired.
Consolidate your debt with a home equity loan
Another popular and effective strategy involves using a home loan for debt consolidation. You can transfer the balance of all your current personal loans and lines of credit to your home loan balance or to a new home loan. This way, you pay much lower interest rates that are typical of a secured personal loan. You have smaller monthly payments and save money. The only downside is that if you default on the secured loan, your home may be repossessed.
Is Debt Consolidation The Right Option For Me?
If you are having serious difficulties paying off your debts and you are piling up more debts, you should contact a specialist right away. A debt counselor or specialized financial advisor can provide you with the professional assistance you need. The specialist determines your current financial situation and works out an effective debt relief strategy for you.
Debt Consolidation Application
You should submit your debt consolidation loan application immediately after finding the right product for you. You still need to take a credit check to make sure you qualify. The lender will review your income and monthly expenses to make sure you have enough money to pay back the loan. You should be absolutely sure which loan you are applying for, as multiple applications can seriously damage your creditworthiness.
If you are already on the blacklist, then you need to educate yourself about getting bad credit.
1) Do I Qualify for Debt Consolidation?
The best chance of getting a debt consolidation loan is when the income that remains after you cover your monthly expenses exceeds the monthly installment of the loan. That way, the risk to the lender is much lower. Your creditworthiness must also be acceptable. People with poor credit ratings or those who are blacklisted have a lower chance of being admitted. At the same time, most lenders are willing to approve applicants with a few blemishes, as long as they have been otherwise diligent borrowers.
For example, if you have a late payment or two you can assume you qualify for a debt consolidation loan, but you may need to offer some form of collateral to secure the loan. This is even more true of those who have large debts in the form of short term loans and outstanding credit card balances.
2) Debt Consolidation Mistakes That You Should Avoid
All debt consolidation loans come with closing costs that you have to pay out of your pocket. Usually they are calculated as a percentage of the total loan amount. It is a mistake not to schedule these costs to be paid. It is best to prepare the money in advance or tell the lender that these costs must be included in the loan amount if you have no other choice.
Does This Consolidation Loan Meet Your Needs? It is a mistake to accept loan terms that do not match your financial circumstances, needs, and goals. There is no point in consolidating your debt only to keep struggling to make that higher monthly payment. The best strategy is to negotiate the terms of the loan so that it suits you. Most lenders are more open to negotiation than you think, especially when the demand for their loan products is relatively low. You can easily trade for a lower interest rate, smaller monthly payments, and a more flexible repayment structure.
3) Get professional help with your debt
Before applying for a debt consolidation loan, you need to determine how much you currently owe, how much to borrow, and how to repay the new loan. This is very difficult with someone unfamiliar with finance and the risk of making a mistake is high. Because of this, you benefit greatly from using the services of a credit advisor.
Find a local debt expert
The specialist will recommend you the most effective method of debt consolidation in your case and will help you come up with an accurate plan for repaying the new loan so that you do not have to struggle with your finances.
The credit advisor or financial planner will help you find the cheapest consolidation loan and make sure that the repayments are tailored to your budget. This ensures that you can get out of debt without undue struggle.