Debt Consolidation

Having debt of any kind can be a cause of worry and can even drive you nuts if you have many of them. Managing debt is very important and one of the many ways of doing it is through debt consolidation. Debt consolidation is a process of bringing all your debt under one loan and is one of the best methods of managing your debt. Refinancing may help resolve one debt but the new loan you take may have higher interest rate or a lower interest rate as well. If the interest rate is high you end up paying more interest over a long period of time but if interest rate is less, the amount that you pay back finally is reduced.

It is recommended that instead of managing several loan on credit cards, overdrafts, store loan and other loans and that too on different dates, you consolidate them into one repayment which is affordable. When you have a fixed rate, even the repayments will be the same always. The only thing is that you may have to pay some settlement fee to your existing borrowing.

Have you ever thought of how much you need to borrow to settle all your debts?

  • The only purpose as to why you are taking a loan for consolidation is to replace all your outstanding bills and loans to one lender so that you make only one repayment each month.
  • Calculate the actual amount that you owe to all your creditors and borrow exactly the same amount from another lender.
  • Do not borrow more that the owed amount as it will increase your debt and you will end up paying more to your lender in the long run.

It is always advised that you use any savings that you have in paying off your loan as the interest levied on the loan will definitely be greater than the interest you getting on your savings. People can use budget planner calculator to check all the money that you are earning and that your spending. It will help you know where to make a cut in your expenditure and help you save some money which can be used to pay off loans. Debt consolidation saves you the burden of remembering dates of repayment of each loan and the amount that you have to pay to each of them. So if you have debt from different creditors you can think of putting it under one lender.