Most of us have seen the plethora of debt consolidation advertising campaigns on television. There is a considerable amount of competition in the debt consolidation market because unfortunately, many individuals are struggling financially and these companies provide much needed financial relief. Home loans, car loans, credit cards; people can get loans from a huge variety of lenders for almost anything these days. The dilemma is that all these loans are hard to manage and if you fall behind in your monthly repayments, you can end up in a lot of trouble.

The concept behind debt consolidation is that you can take all of your existing debts together and consolidate them into one, easy to handle loan that is easier and gives you a much clearer understanding of your financial future. For many people, there are a number of benefits in consolidating your debts, and this article will explore debt consolidation in detail and the advantages they provide to give you a better understanding if debt consolidation is a good opportunity for your financial position.

The Basics

Debt consolidation allows you to repay all your current debts with a new loan that typically has different (and in many cases more appealing) interest rates and terms. There are a number of reasons why people use debt consolidation services.

High-Interest Rates

All loans have varying interest rates and terms, however, credit cards possibly have the highest interest rates of all loans. Though credit card companies often have a no interest period of approximately a couple of months, the interest rates after this time can soar 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 more than likely that your debt will increase much faster than you’re able to pay it off. Generally, debt consolidation can provide lower interest rates and better terms, which can save you a good deal of money in the long-term.

Too much confusion with multiple loans.

When you have quite a few debts with different interest rates and minimum repayments that are due at different times, there’s no question that it can be very difficult to manage and can become confusing at times. This increases the likelihood of missing a repayment which can give you a poor credit history. Debt consolidation certainly helps in this situation by combining all of your debts into one which is far easier to manage and gives you a clearer picture of when you’ll be debt free.

High Monthly Repayments

When individuals are dealing with multiple debts, it’s very difficult to manage your cash flow due to the high minimum repayments required for each debt. On top of 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 situation can go south considerably quickly. Debt consolidation loans provide one repayment each month, and you can negotiate your monthly repayment amounts based upon the length of time you want your loan to be.

With this being said, if you’re interested in consolidating your debts, it’s crucial that you perform plenty of research to find the best debt consolidation interest rates and terms. You’ll uncover a vast range of debt consolidation companies, some are good, some are bad, and some are downright predatory. First and foremost, you’ll need to pick a debt consolidation company that has lower interest rates and fees than all of your current debts. You’ll also want to inspect the terms and conditions meticulously. Various 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 a considerable amount of homework that needs to be done before you can decide if debt consolidation is the right option for you.

As you can clearly see, there are a variety of benefits associated with debt consolidation for people that are struggling financially. Lower interest rates and fees, lower monthly repayments, and less confusion with multiple debts can save you plenty of money in the long-run, and it’s possibly better for your mental wellbeing too. This article isn’t meant to persuade you to consolidate your debts, as it all depends on your financial scenario. As a result of 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 difficulty. In some circumstances, declaring bankruptcy is a better alternative, so before you make any decisions about your financial future, talk with Bankruptcy Experts Whitsundays on 1300 795 575 or visit their website for additional information: www.bankruptcyexpertswhitsundays.com.au