David Deicke discusses Debt Consolidation for Australians in need of extra funds
If you’ve signed up to too many loans, you may consider getting a debt consolidation loan. This loan is designed to pay off all of your outstanding debts, if possible, allowing you to have either reduced payments or in some cases only the single payment of the loan itself to repay. This is the ideal outcome, but not always possible – credit card and small loan debts can add up fast.
If you’re looking for a debt consolidation loan there are several factors that you might want to consider to find the loan that’s right for you.
Different banks offer different terms on their debt consolidation loans and you want to make sure that you get the best deal for your circumstances.
Some of the factors that can affect your chances are your credit rating, the value and type of collateral that you’re putting up to secure the loan, and of course the total amount that you need to borrow has to be relevant to your income ability to repay.
Your credit rating is the score of your debt history, which lenders and potential creditors determine how much of a risk you are to lend money to. The lower your credit rating score, the more of a credit risk you are; the higher the score, the less of a risk.
When things start to become difficult to copy with financially that’s the time to try to get a help… if you wait, your credit rating may drop lower and you’ll have to pay more in the end.
The best debt consolidation loans are usually an extension of your home loan, but normally you’ll have to put up some type of collateral in order to secure your debt consolidation loan regardless of which loan you take. This can allow you to get a larger loan while paying lower interest rates, since the lender has some form of property that they can possess and sell if you fail to repay what you’ve borrowed.
The most common forms of collateral are cars and property, and both are very effective.
The amount that you want to borrow is obviously a big consideration in getting a debt consolidation loan in Australia. Borrow the lowest amount that you can possibly cope with while still taking care of all of your debts (or at least the largest debts.)