Should I Consolidate My Debt?
Consolidating debt is an opportunity for some people to save money. While you consider the importance of consolidation you should take into account your current situation as well as the options for consolidation available to you. Not everyone should consolidate their debt but for those who may benefit from it consolidation could save them thousands of dollar. Take a few minutes to consider the opportunities for you to consolidate.
What Is Consolidation Likely To Do?
If you have an opportunity to consolidate your debt you may be able to pay off your debt faster. You may be able to save money if you consolidate. It may also make paying off your debt easier because you will have only one monthly payment to make. In addition to this you may free up extra credit for emergencies. If your debt situation is getting out of control debt consolidation is one of the best routes you can take, but, is it right for you?
There are several situations that should warrant consideration for consolidation.
- Are you struggling to make monthly payments because your debts are to close to your credit card limits?
- Do you have defaults on your credit report? Those with have defaults on their credit report may have a more difficult time qualifying for some types of debt consolidation loans. On the other hand those with a good credit report may be able to get an unsecured personal loan to pay down their debts with.
- Do you have an available credit card limit with a low interest rate? If you do, a balance transfer of higher interest rate credit cards or other debts onto the card will consolidate them into one payment each month.
- Do you have equity in your home? If you have equity, you may be able to borrow against the value of the home with a low interest rate secured loan. These funds can then be used to pay down all of your unsecured debts, personal loans or other debts you may have, creating one lower interest rate loan to pay each month.
- Do you have low interest rate credit cards and persona loans now? If you do, you may not qualify for any additionally lower interest rates. IT may still make paying your debts easier to do by having one loan, but it may not save you anything unless you pay it off faster.
Once you consider your situation, you may find that there are several types of debt consolidation solutions available to you. Here are some ways to consolidate the debts you have.
- Use a home equity loan with a fixed interest rate to pay off all your debts. This is one of the lowest costing solutions available to you.
- Work with one of your credit cards with an available balance and consolidate all of your debts onto the one line of credit. You may be able to get your current lenders to extend credit limits to allow you to do this.
- Apply for a personal loan, which is an unsecure lined of credit, hopefully with a low interest rate and a fixed rate. These can be used to pay off any loans you may have including other credit cards, personal loans or other debts. These are difficult to get if you do not have a good credit score, though.
Should You Do It?
The question is, can you consolidate your debt? If you can use any of these methods to consolidate your debt into a lower interest rate loan, go for it. You should look for these benefits in any debt consolidation option you consider.
- Does it lower the interest rate you are paying?
- Does it help you pay off your debts faster?
- Does it help you stay organized so you don't have to pay over the limit and late fees?
- Does it offer you a fixed rate?
- Can you qualify for this type of debt consolidation loan?
If you find that these considerations are right on, then consolidating your debt may be the best choice for you. If you are unsure of your options, talk to a lender today, or talk to your financial adviser about options that may work for you.
Fox Symes is the largest provider of debt solutions to individuals and businesses in Australia. Fox Symes helps over 100,000 Australians each year resolve their debt and take financial control.
If you are in debt and want to know more about the solutions available to you contact us on 1300 361 204 or fill out the short contact form.