The last few years have been tricky for many families when it comes to managing their finances. The global pandemic meant that many people lost their jobs or had their hours cut, and feeding the family became tougher than ever. It’s hardly surprising that many people ended up in more debt. But now that the world is slowly getting back to normal, it’s time to get the finances sorted once and for all. Debt consolidation is one way to get debts under control.
What is debt consolidation?
With a debt consolidation loan, you take out a new loan and use that to repay all of your existing debts. If you’re paying multiple debts off each month such as loans and credit cards, then it can be difficult to keep track of all the different accounts and the different payments that need to be made. This is where consolidating your debts can come in handy. With debt consolidation, all of your existing debts are lumped together with one company, and you then just make one payment towards the total debt each month.
Paying just one figure to just one company makes paying off your debt a lot simpler and much easier to manage.
Click here to find out more about debt consolidation.
Is debt consolidation a good way to manage your debt?
As with any loan, it’s important to make sure you understand exactly how much money you’re going to borrow and also how much money you’ll be paying back. You need to know the figures for both the monthly repayments AND the total amount that you’ll pay over the course of repaying the loan.
Sometimes, a debt consolidation loan can work out far cheaper than continuing to pay off your existing debts separately, but it’s important to work out the figures before you go ahead. The last thing you want is to end up in more debt than you are already.
One of the main benefits of debt consolidation is that it’s far easier to keep track of. When you’re paying off multiple debts it’s really easy to lose track of what needs to be paid when. With just one monthly payment, it’s really easy to know exactly what needs to be paid and therefore you’re much more likely to avoid any missed or late payments.
Whenever you’re taking out any new form of credit, it’s really important to be sure that you can afford the repayments.
Is it easy to consolidate your debt?
Whenever you apply for any form of credit, you’ll need to pass the application requirements. This is the same with a debt consolidation loan. Each company will have their own criteria, so take some time to read through this before you apply in order to avoid any unnecessary rejections which can then sit on your credit record. If you’ve got a poor credit history, then you may still qualify for a debt consolidation loan but you may have to pay a higher interest rate. Make sure you know how much you’ll be repaying before you go ahead.
Consolidating your debts could make managing your finances much easier. Just be sure that you understand exactly what you’ll be repaying and for how long before you go ahead and apply.
*This is a collaborative post.