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Category:  Money

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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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