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We’ve all seen the myriad of debt consolidation ads on TV. There is a considerable amount of competition in the debt consolidation market because sadly, many individuals are struggling financially and these companies provide much needed financial relief. Mortgages, car loans, credit cards; individuals can acquire loans from a vast variety of lenders for virtually anything nowadays. The problem is that all these loans are hard 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 manage loan that is easier and gives you a much clearer picture of your financial future. For some people, there are a range of advantages in consolidating your debts, and this article will take a look at debt consolidation thoroughly and the benefits they provide to give you a better understanding if debt consolidation is a good alternative for your financial situation.

The Basics

Debt consolidation enables you to settle all your current debts with a new loan that frequently has different (and in most cases more desirable) interest rates and terms and conditions. There are several reasons that people use debt consolidation services.

High-Interest Rates

All loans have differing interest rates and terms, however, credit cards probably have the highest interest rates of all loans. Though credit card companies generally have a no interest period of around 1 or 2 months, the interest rates after this time can rocket 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 increase much faster than you’re able to pay it off. Typically, debt consolidation can provide lower interest rates and better terms, which can save you plenty of money in the long-run.

Too much confusion with multiple loans.

When you have numerous debts with varied interest rates and minimum repayments that are due at different times, there’s no question that it can be hard to manage and can become confusing. This increases the probability of missing a repayment which can give you a bad credit history. Debt consolidation substantially helps in this situation by combining all of your debts into one which is significantly easier to take care of and gives you a clearer picture of when you’ll be debt free.

High Monthly Repayments

When individuals are facing multiple debts, it’s tough to manage your cash flow as a result of the high minimum repayments required for each debt. Further to 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 poor credit rating, and your financial position can go south very quickly. Debt consolidation loans provide one repayment each month, and you can negotiate your monthly repayment amounts depending upon the length of time you wish your loan to be.

Having said all this, if you’re interested in consolidating your debts, it’s critical that you perform proper research to find the best debt consolidation interest rates and terms. You’ll notice there’s a large variety of debt consolidation companies, some are good, some are bad, and some are straight-out predatory. Firstly, you’ll want to select a debt consolidation company that has lower interest rates and fees than all your current debts. You’ll also need to examine the terms diligently. Certain consolidation loans can be secured against your home or other assets, and you may be required to pay extra fees including application fees, legal fees, stamp duty and valuation. The reality is, there is plenty of homework that needs to be done before you can decide if debt consolidation is the right option for you.

As you can obviously see, there are a number 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 psychological wellbeing too. This article isn’t intended to convince you to consolidate your debts, as it all relies on your financial state of affairs. Due to 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 adversity. In some scenarios, filing for bankruptcy is a better solution, so before you make any decisions about your financial future, talk with Bankruptcy Experts Brisbane on 1300 795 575 or visit their website for more details: www.bankruptcyexpertsbrisbane.com.au