Debt consolidationis just one of the avenues open to those who are struggling with their finances. If you are dealing with multiple debts then this could be a practical solution for you.
What is Debt Consolidation?
One of the main problems with the modern world of credit is that it can be too easy to take out more products than you can manage. This can leave you missing repayments or going over your credit limits before you realise. This can cause your debts to escalate as creditors charge you for missed payments and limit excess and this will be added to your debt total. This means you can end up paying more interest and falling further and further behind.
· Debt consolidationaims to bring all your debts together into one single monthly payment. This means no more forgotten repayments and the fines and penalties that they can bring.
· You can combine many different credit products with debt consolidation including car finance loans, personal loans, credit cards, store cards and overdrafts.
· This single repayment is much easier for you to manage and you will always know what you have to pay and when you have to pay it by.
· This will help to prevent the situation of receiving fines and charges for missed repayments that will add costs to your borrowing.
· There will also be less paperwork with debt consolidation and one point of contact for you to deal with.
· This makes the administration side of your finances so much easier and will avoid the time and expense of contacting several different creditors when you want to sort things out.
· It is important that you include all of your debts into your debt consolidation loan. Otherwise you could end up in the same situation as before trying to juggle multiple debts.
· Some debt consolidation loans will include early repayment charges. This will mean if you do decide to repay the whole loan early you will have to pay a standard charge. This would cover any interest lost by your creditor by settling the loan early.
· Although you may not save money by paying the loan off early with these charges it would make sense to do so if you can afford it. This would relieve the pressure on your finances and leave you debt free.
Debt consolidation can be a practical way to reduce the stress and hassle of your credit products. You can combine various debts into one single payment which is so much easier for you to manage.