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You have probably heard the term debt consolidation, but maybe you aren't sure what it means. Debt consolidation can be a good option for those with multiple small debts, as it will combine them into one larger debt.
Debt consolidation involves combining all one's smaller debts into one larger debt. This means the person in question would take out one large loan to pay off multiple smaller loans. You will still have to pay off the full sum that you owe across all of your debts, but it can help eliminate the stress of making multiple payments to different lenders each month.
Debt consolidation is a great option for those with multiple high interest debts, such as credit card bills. Paying off multiple smaller debts has many disadvantages, including the cost of interest. Before jumping in to a debt consolidation loan, your first step is to calculate what the payments of your debt consolidation loan will be.
Debt consolidation can help you save on interest costs, as an unsecured debt consolidation loan will usually have a lower interest rate than a smaller personal loan such as overdue bills or credit card debt. Cutting down on interest costs means that you will end up paying a lot less on to your loan over its lifetime. Similarly, you will not be charged multiple fees from different creditors, as you will only be dealing with one lender.
Debt consolidation is a great option for some people, but may not be for you. Be sure to look into all options for debt solutions before taking out a debt consolidation loan. If you wish to talk to a consultant about your options, contact us today.
Disclaimer: Beyond Debt are not lenders. We do not offer loans for debt consolidation.
Beyond Debt is a trading name of DCS Group Aust Pty Ltd. Australian Credit License: 382607. RDAA Number: 1126. PO Box 3074 Newstead, QLD, 4006.
DCS Group operates under a Limited Liability scheme approved under Professional Standards Legislation
