How debt consolidation can help if you're doing it tough financially
Debt – it happens to almost everyone, but not everyone knows the best way to manage debt. Whether it’s credit cards, a personal loan, store cards, education or renovation debt, the list is endless – and whatever outstanding debts you have, they may be causing a strain on your finances.
If you’re doing it tough financially because of multiple loans, debt consolidation could be the answer. Want to know more? Here are some great benefits that could help, just by consolidating your debts.
Your repayments are simpler with only one regular payment
Consolidating debt means putting an end to the worries of having multiple payment dates, which can be easy to miss unless you’re really on top of what needs to be paid and when. Miss a date and watch the costs and late payment penalties start to mount up.
Debt consolidation makes repayments a lot simpler and easier because you will only have one regular repayment date and one repayment amount – and that’s pretty hard to miss.
Your costs could be lower
When you consolidate small loans or other debts into one single manageable loan, the new loan usually comes with more favourable terms or a lower repayment amount (or both). This means a lot of savings going straight into your hip pocket – money you can use for other purposes.
You can pay off your debts faster
Debt consolidation gives you the opportunity to make extra payments if you have the money to do so. Naturally this will help you pay off your debts earlier, automatically providing savings as you’ll pay less in costs overall.
While debt consolidation may also offer you the opportunity for an extended loan, paying off your debt on time and early will help you save a lot of money and takes you out of the financially tough situation sooner, rather than later.
You can reduce your monthly payments
If you have multiple small debts, it’s a good idea to add them all up – calculate your total debt and total monthly repayments so you know exactly what you are forking out each month. Make sure you also check how long It will take to pay off each debt if you stick to your current repayment schedules.
Once you have a clear picture, take a look at how you can consolidate those debts into one debt, and there’s a good chance that you’ll reduce those monthly payments. Remember, your future payments are spread out across the loan term.
You could avoid harming your credit score
Obviously, the more repayments you have to manage, the greater the chance you have of missing a repayment. So, by putting them all into one, and just having that one repayment to deal with, you could avoid harming your credit score.
But do keep in mind there may be a temporary dip in your credit score, as many lenders view new credit requests as a negative score factor. Don’t worry though, any dip won’t last long if you make your repayments on schedule.
You’ll reduce your stress levels
We know how stressful it can be if you’re doing it tough financially and you have loads of debts and bills to pay. It could even lead to anxiety that may have a negative effect on your health.
That being said, when you consolidate debts and you only have one repayment to suit your budget and your pay cycle, you’ve cleared up the clutter, essentially giving you a clearer mind. It’s the beginning of you taking control of your finances, eventually putting yourself in a better financial situation.
What is the best way to consolidate debts?
While there are several ways to consolidate debts, a personal loan is the most common – and often the simplest option. It's quick and convenient and you can clear your debts faster with a simplified, single repayment strategy.
That means you will know precisely how much you’ll have to pay on a specific date each week, fortnight, or month. Personal loans are generally unsecured, so a creditor can’t take any of your property as collateral. Plus - if you have good credit and a steady income, you’ll have a better chance of getting your loan applicaton approved.
Best of all, you can pay it off ahead of time, so you can reduce the overall costs that you pay.
Safe Financial is here to help
So, there are plenty of benefits that come along with debt consolidation, and here at Safe Financial we’re here to help. Just take a look at our personal loans up to $5,000 to find out how quick and easy it is to get your hands on some extra funds. As always, make sure you compare the costs and benefits of the new loan to your existing loans, but once a loan is approved, we can usually deposit the cash into your bank account within a few hours - so you can get your finances back under control in next to no time!