If you’re overwhelmed by having different debts in different places, a debt consilidation loan might be the answer.
Why is it so hard to pay off my debts?
Let’s say you have a regular credit card, and you’ve also taken out a store card to buy a new laptop with 12 months interest-free.
You decide to concentrate on paying off your credit card, because you have a whole year to worry about the store card, right?
Flash forward to the 12 month mark. You’ve just had to replace your hot water system and had an expensive dental bill. Your credit card’s maxed out, and the store card’s high interest is starting to kick in.
One repayment’s due on the 15th of each month, another on the 20th. By the time one comes around, you can’t afford the other. It’s spiralling out of control.
While these purchases can be justified and were affordable at the time, this is where things get hard to handle. And when debt starts to stress you out, it’s time to take back some control.
What’s a debt consolidation loan?
A debt consolidation loan is a way to bring together all your debits – credit card, student debt, store card etc. – into one so you’ll be making payments in the one place.
It also means no multiple annual fees, and one regular repayment, with one interest rate.
Interested to know what it could look like for you? Check out our debt consolidation calculator. It’s a fantastic tool that’ll show you how much your minimum repayments – and monthly interest – can change.
Of course, it doesn’t mean you’re instantly on easy street – you still have to pay off the loan. But what it does mean is that you can take a breath and take back some control.
Why consolidate my loans?
Having one debt consolidation loan usually outweighs the benefits of having a heap of little debts.
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It can save you money, either by having less interest or fewer fees to pay (or both).
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One loan’s much easier to manage than multiple loans – just one monthly repayment.
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Because there’s only one loan, setting up a repayment plan is easy – you’ll have a better idea of when you’ll be debt free.
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Having one, easy-to-manage debt is a good way to improve your credit rating.
How do I consolidate my loans?
While it’s a pretty straightforward process, you should do some homework before you apply.
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See how much your new loan repayment will be over different loan terms (or periods) with our debt consolidation calculator.
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Check out several lenders’ debt consolidation personal loan offerings, and then use our loan comparison calculator.
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Once you’ve consolidated your debts, this is the time to review your finances and get on top of them.
Please contact us on 1300 874 474 if you seek further assistance on this topic.
Source: NAB https://www.nab.com.au/personal/life-moments/manage-money/manage-debt/consolidation
Reproduced with permission of National Australia Bank (‘NAB’). This article was original published at https://www.nab.com.au/personal/life-moments/manage-money/manage-debt/consolidation
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