Debt consolidation is combining your various outstanding debts and into one loan. This process is best carried out once advice is sought from a professional Mortgage Broker as debt consolidation can be recommended for many individuals, although not suitable in all cases. There are some potential drawbacks to debt consolidation, but there are also many positives which can come from putting all your debt under one umbrella. As above, professional advice should be sought as individual circumstances vary.
At iLender we have put together some key points which you should consider when looking at whether debt consolidation is right for you. By understanding these, you can get an insight into debt consolidation and hopefully take the first steps to taking greater control of your finances.
One Interest Rate
Having all your debts packaged into a single loan means that you will only have one interest rate instead of many. This makes everything far easier to manage and also means that this one interest rate will most likely be lower than what you would have paid collectively. Consolidating your debt allows you to pay less in interest costs than if you had multiple debt payments at different rates. It also means that you can make inroads into a debt, especially if most of it is credit card related. However it must be understood that if you consolidate any debt over a longer period, you may end up paying more in the long run.
Make Your Life Easier
Having a multitude of different debt repayments from different sources can be difficult to manage. Having so many different deadlines, rates and obligations to consider can be difficult to maintain and it can be mentally draining. Instead, you can have your debt consolidated so that all of your debt obligations are neatly packaged into one loan so easily managed and less chance of missed payments which can dramatically affect your credit file.
More Disposable Income
By completing the debt consolidation process, you will be able to free up money which would have otherwise been unavailable. This will allow you to further enjoy your life and not have to worry about being able to pay for the small enjoyments that life throws your way.
The Possibility of More Debt
There are however some drawbacks to consolidating your debt. One potential hazard could be the potential of accumulating more debt after the savings that come from this process. When you consolidate your debts you will most likely be paying less per month and in turn have more disposable income. Sometimes people in this situation will feel unbelievable freedom and will have an urge to splurge on various goods. All we can say is ‘please don’t!’
iLender are always on hand to provide comprehensive advice and assistance to our clients. We pride ourselves on being able to provide debt consolidation services which continues even after all of your debts have been consolidated.
iLender are available to offer advice on debt consolidation for people New Zealand wide. Contact us today to reap the benefits of a simpler and more efficient debt repayment scheme.