There are so many ways to accumulate debt these days, from credit cards, store cards, personal loans and so much more. Sometimes all these different types of debts can have very high interest rates and it’s often a good idea to consolidate all your debt into one loan with a lower interest rate. It also means you will only have one regular payment instead of many smaller ones that can be difficult to keep track of.
Is debt consolidation the right option for me?
To see if debt consolidation is the right thing for you to undertake, keep in mind the following things:
- See how much your payments would be for each period with a loan calculator
- Make a list of your current debts and see how much they will cost you over the lifetime of the debt and compare that to a consolidated loan
- Compare different providers’ rates and fees using a loan comparison tool
- Create or update your budget to ensure you can make the regular repayments
- Most financial institutions offer fixed and variable rates, decide which is right for your situation
Benefits of consolidated loan providers
Unlike credit or store cards, consolidated debt packages generally don’t have a facility to borrow more money than the original agreed upon amount. This means there is less chance of getting into bad debt and get caught in a negative funding cycle that can be hard to escape from. When looking for a consolidated loan provider, the following 5 things may benefit you:
- No monthly fees
- No penalty fees if you are able to pay off the whole amount early
- Repayment intervals that suit your needs
- Easy online application for the loan
- Flexibility in case you run into difficulties in meeting a monthly payment
Can I get help to consolidate my loans?
Some financial institutions will even contact the credit card companies and arrange the whole consolidation process for you. The great thing about a consolidated loan is that after you have finished paying it off, you can start fresh and if you pay off the loan in a timely manner, it can even help your credit history! If you don’t get approved for a consolidated loan, there are still a couple things you can do to reduce the amount of debt you have, including:
- Speaking to your current credit card and store card companies to organise a schedule that suits both parties
- Sell any valuable assets that you might have to reduce your interest and bad debts you have outstanding
- Refinance your current mortgage or long term loans if the interest rate if more favorable now than when you set them up
If you have done your research and chosen the right loan with the right provider, debt consolidation (or debt simplification as some call it) should make paying off your debts quicker and easier, reduce the excess fees and interest you are currently paying as well as simplifying your budget and regular payments. Going forward, try to explore your different credit options before applying so that you don’t need a debt consolidation loan in the future!
Since 2003, Rapid Loans New Zealand has been helping NZ borrowers get urgent personal loans quickly and easily. Rapid Loans was established to provide a totally online alternative for borrowers to secure fast personal loans, with none of the restrictions and requirements of traditional ‘bricks and mortar’ lenders.