6 Benefits of Getting a Debt Consolidation Loan
In the world of finance, we often hear the term ‘debt consolidation’. Consolidating our debts is widely advertised as a way to reduce debt stress and free up some cash flow.
So, how does debt consolidation work? What are some of the advantages and should you consider consolidating your debts?
Let’s take a look at some of the top benefits of getting a Debt Consolidation Loan.
#1 – Reduce the Amount of Interest You Pay Overall
The best Debt Consolidation Loans Australia has to offer borrowers will reduce the amount of interest you have to pay on your debts. Loans for debt consolidation work particularly well for debts that attract high-interest rates, such as several credit cards.
Let’s say you have two or more credit cards that are attracting a 17% interest rate on average. You might get a Debt Consolidation Loan that’s, say, only 8.5% pa. That’s a considerable reduction from 17% pa and will save you a handsome sum of money by the time you repay the Debt Consolidation Loan.
The idea of debt consolidation is to roll more than one debt into one loan.
#2 – Improve Your Credit Score
If your credit history and credit score are suffering due to having too many loans and credit cards on the go, you can improve your score in time if you consolidate your debts into one single loan. Debt Consolidation Loans for bad credit are a great idea. Anything you can do to bolster your credit score is a positive step to take for the future.
#3 – Reduce the Lifespan of Your Debts
This point is especially true when you’re paying back credit card debt. These debts are ongoing. As in, there’s no specific end date like there is with a loan.
If you’re tired of making credit card repayments every single month and want to jump off the credit card merry-go-round, then a Debt Consolidation Loan provides the perfect opportunity to do just that.
You’ll then have an end date in sight for your debt and can work towards becoming debt-free, so long as you get rid of those cards once you’ve paid off their balances with a Debt Consolidation Loan.
#4 – Lower Your Monthly Repayments
When you consolidate two or more debts into one simple loan, you can reduce the amount of money you have to repay every month. This will depend on the deal you get with your chosen lender and how long you take out a Debt Consolidation Loan for, but more often than not, you’ll have more cash in your pocket every month once you do consolidate your debts.
Anything that can improve your bank balance is worth seriously considering, as the dent in your cash flow is one of the toughest aspects of owing money.
#5 – Pay Out Your Debts Faster
If you can afford shorter terms on your Debt Consolidation Loan and have the cash to make decent monthly repayments, you could conceivably repay all of your debts faster than if you were still paying them individually.
This is something you would need to carefully work out, based on the lender’s terms, interest rates, loan establishments fees and so on, but repaying all your debts sooner is possible with a single debt consolidation loan.
When everything is simplified into one debt, there are more possibilities that will work in your favour.
#6 – Experience More Peace of Mind Overall
This final point might just be the most important one of all – Peace of mind.
What price can you put on having less financial stress in your life?
Money problems or a lack of cash flow is one of the greatest causes of stress in the modern world. It can lead to mental issues, arguments with loved ones and even marriage breakdowns. If getting a Debt Consolidation Loan can reduce your overall well being, free up your finances and give you a brighter-looking future, then it’s definitely worth doing.
There’s nothing worse than feeling snowed under in debt, but debt consolidation can help get you out of that rut.
If you currently have two or more ongoing debts, whether it be credit cards, Personal Loans, payday loans or even store cards, then it’s worthwhile looking into getting a Debt Consolidation Loan. Just do your research and choose the right lender and deal that suits your needs.