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What is debt consolidation and can it benefit me?
By Fox Symes & Associates
If you are in debt a consolidation loan may be an option to help
you reduce your debt. What is a debt consolidation loan and how does it work? A
debt consolidation loan is the replacement of multiple loans and debts, such as
credit cards and unsecured personal loans, with a single personal loan.
What are the benefits of a debt consolidation loan? A
consolidation loan means you only have to make one payment instead of making
numerous payments.
With a consolidation loan you may end up with a lower monthly
payment and a longer repayment period. This can help some people to manage their
finances more effectively.
Example of how a consolidation loan may work You may currently
have two or more personal loans or credit cards with outstanding balances
totaling $8,000. The minimum repayment for all these debts is around $350 per
month.
By consolidating all these debts into a single loan over a
longer term of say 5 years, the amount you may have to repay could be reduced to
less than $180 per month.
How often can I make repayments on a debt consolidation loan?
With a debt consolidation loan you can normally make payments either weekly,
fortnightly or monthly. The length of the debt consolidation loan can be set for
a repayment which meets your needs.
You may be able to choose between 12 months and 7 years
depending on the purpose and the amount of your consolidation loan.
What is the difference between a Variable or Fixed interest rate
loan? A variable rate debt consolidation loan gives you the flexibility of
making extra repayments at any time and at no extra cost.
A fixed rate debt consolidation loan means your repayments are
fixed for the term of the loan.
Do I need security for my debt consolidation loan? Normally a
debt consolidation loan is an unsecured loan, so generally, no security is
required.
What fees will I need to pay for my loan? Most debt
consolidation loans have no ongoing fees and no early repayment fees. An
establishment fee may be payable.
When applying for a debt consolidation loan When applying for a
debt consolidation loan you need to be careful and to be fully informed. Make
sure:
. You fully understand what you are doing . The solution will be
of real benefit to you and not just a short term fix . You have achieved control
over your debts . Your repayments will be reduced and not increased . You are
fully informed of the consequences of the steps you are taking . There are no
hidden costs . You are better off as a result of the solution you have chosen
Fox Symes & Associates has guided over 10,000 Australian individuals and
families resolve their financial position and regain control of their
lives. If want to know more then visit their website at http://www.foxsymes.com.au/
or contact them on 1300 559 899 (Australia wide).
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