Debt consolidation: 3 key reasons to roll your loan into one
The words ‘debt consolidation’ might be a mouthful, and also sound like one of those complicated finance terms, right? Ironically, debt consolidation actually simplifies your loans!
A debt consolidation loan is an unsecured personal loan you can take out to replace multiple existing loans. It rolls your debt into one loan, most often used to combine personal loans, car loans and credit cards. If you have multiple loans (especially those charging high interest), there’s a few key reasons why you might benefit from rolling them into one.
Lower interest rates
Although interest rates aren’t EVERYTHING when choosing a loan, a lower rate can save you plenty of money in the long run. Because one combined loan is bigger, it usually means a lower interest rate. Which can be reason enough to consolidate your loans!
Debt consolidation loans are generally spread over a longer period. Combined with a lower interest rate, this makes lower loan repayments. Lower repayments obviously means more cash to spend on more exciting things, but it’s a good idea to compare the overall costs over the full loan term.
Debt consolidation means just one loan to manage, which can make budgeting much easier. Rather than keeping track of several different payments across the month, you have just one payment to worry about. It’s easy to know exactly how much and when your payment is going out.
By creating a simple budget which includes your income, repayments and any other regular expenses, you’ll be able to get your finances on track (and be on your way to being debt-free!) You don’t need to have a finance major to get your finances on track – noting down all your regular expenses and income is the first step. By spending whatever you have left over, you can be on your way to being debt free. You can use this simple template as a starting point: (use whichever pay period applies – eg. If you are paid weekly, create a weekly budget)
Simple Budget (monthly)
Loan repayment $__________
Power / Gas $_________
Internet / Phone $_________
Food / Groceries $__________
Petrol / Public transport $ ________
Car maintenance / registration / WOF $_________
$(income) minus $(expenses) = __________
Essentially, debt consolidation can mean you’ll become debt free faster! Applying is much the same as applying for any other finance. Even if you have bad credit, we still might be able to help with a loan (you’ll just need to fit some other criteria to ensure affordability).
Sound good? Applying is super easy, and 100% online. Apply now.
Got questions? Chat to us online here.