Consolidated loans are a financial option taken combining all of your current debts into one monthly payment to make your finances easier to manage and to ensure that you don’t lose track of debts or fall behind on payments. Consolidated loans are simply one option in an extensive range of solutions in managing your debt.
So, how do they work? Consolidated loans are arranged via your bank or a finance broker. You apply for one large loan to pay off all other smaller debts or loans. Then, if approved, you only have only loan repayment to manage. It is not always possible to obtain a consolidated loan due to the amount you want to borrow, your credit and repayment history or similar issues. There are other options to consolidate your debts without borrowing more money though, like a Debt Agreement.
A Debt Agreement generally entails negotiations and compromises with your current creditors (usually via a third party) to agree to pay off your debts in a different way than was initially proposed. This usually means paying off your grouped unsecured debts over a fixed period of time, often with a lower payment and/or the interest frozen.
So, how do you know which debt solution is right for you? Well, firstly, you need to assess your current level of debt. Consolidated loans are appropriate for those who are finding it hard to keep track of various monthly payments and would enjoy one simple monthly repayment. A Debt Agreement is an option for those people who find themselves unable to secure a consolidation loan, are struggling to make their current repayments or may already be in arrears and facing collection. Second, it’s best to seek financial guidance when considering debt consolidation, to ensure your financial situation is assessed correctly and advise you on the steps to take to consolidate your loans.
lifeafterdebt.com.au offers experienced, professional financial guidance and are able to guide you through every step of your debt consolidation, or to assess your finances and direct you towards another solution. Give us a call on 1300 237 669 or visit our website today for more information.