Debt Consolidation threads on Australian Property Forum
Bankruptcy and Debt Consolidation - What happens when you can't meet your loan repayments? Debt To Equity Debt Consolidation - It's time to examine your financial future Debt Consolidation Australia - What is the best way of dealing with my debts?
What is Debt Consolidation?
Debt consolidation is the process of taking all debts (for example credit cards, overdrafts, car loans and store cards) and consolidating them into a single lower interest loan, providing easier and more manageable monthly payments. The aim of a debt consolidation loan is to be able to pay off existing debts by grouping them together at a lower interest rate.
Some reasons why you might consider debt consolidation include:
- Debt Consolidation is a more manageable solution for people who are bad with money
- Debt Consolidation is a lower interest type of debt
- Debt Consolidation removes the potential to accumulate additional debt
Poor management of personal finance is one way in which many people get into debt. The best way to develop good financial management is through financial education. Unfortunately this is rarely taught and only learned through hard experience. As a consumer it is often difficult to resist temptation and to budget effectively to meet all financial obligations, such as mortgage, utility bills, phone bills, car loan payments, store cards and credit cards. These are just a few of the many bills we face every month. With multiple debts and obligations it becomes hard to managing your finances. People often feel trapped in debt because of continuing missed or late payments, which can result in fines, fees, penalties and additional interest. This makes the debt situation worse and even harder to manage.
Debt consolidation can help by eliminating the need to manage multiple debts. Instead, multiple debts are consolidated into one more manageable monthly payment that can be automatically debited from your bank account. This makes debt management significantly easier, and reduces the interest rate.
Another benefit of debt consolidation is it prevents you from incurring more debt. One of the issues with credit cards and overdrafts as that they allow you to accumulate more debt, often resulting in a cycle of debt that can be difficult to escape. In contrast a debt consolidation loan gives you a structure to eliminate debt without accumulating it further. Debt consolidation loans are a single lump sum that you are obliged to pay back in total. It prevents you from obtaining new credit and as a consequence running up further debt.
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