Tag: consolidation loans

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Debt Consolidation

Debt Consolidation Loans: Pros vs Cons

the pros and cons of debt consolidation
the pros and cons of debt consolidation

We all have seen the advertisements, from the sublime to the absurd, for payday lenders and car title loans. There are a lot of options out there when it comes to debt consolidation loans. When you are in debt, finding new sources of money and innovative ways to pay existing bills can be a challenge. However, there really is no need to fall victim to predatory lending, but rather, you can consider alternatives to addressing and resolving your debt crisis. In this article, we discuss the pros and cons of debt consolidation.

According to the Australian Securities and Investments Commission (ASIC), 18.5% of consumers have credit card debt, totalling $45 billion. Of that $45 billion, $31.7 billion was from interest alone. Indicating the potentially catastrophic consequences of credit card overuse for consumers and the impressive revenue stream for banks.

Debt Consolidation Loans – A Simple Answer

With a significant portion of the population subsumed by credit card debt, not to mention other expenses including rent, utilities, car, and mobile service, more people are sliding into a fiscal hole, owing money to multiple sources.

In such a scenario, what to do? Are there options to help alleviate the pressure?

Yes, there are, with the two biggest solutions being debt settlement and debt consolidation. The two may appear similar, like a credit report verses a credit score, but they are different. Even though they both seek to solve the problems of debt, the two offer different benefits and potential problems.

Make Your Life Easier

Debt settlement is the negotiation with creditors and/or lenders to settle the debt for a figure less than the original amount. It works better when there is only one creditor since multiple creditors will demand multiple negotiation sessions, with no guarantee that everyone will agree to the new terms and conditions.

This can be a risky solution to your debt problems because there is always the chance that you may accrue more fees and interest while negotiating.

If you employ a debt settlement company to represent you, then they’re definitely will be costs for their services. Also, there will be an impact on your credit report and credit score, because even though the debt was settled, it wasn’t paid in full.

As a result of these factors, debt settlement may not be the best option, even though it can provide short term relief. Therefore, debt consolidation would appear to be the preferred choice for many people struggling to be debt-free.

Debt Consolidation is a Good Option

Debt consolidation is appealing because it simplifies the bill-paying process. Instead of paying multiple bills to multiple lenders every month, you will pay one bill to one lender, with a lower amount and a lower interest rate. In this manner, you should theoretically be able to pay off your debt quicker and to avoid bankruptcy.

However, please note that if you don’t make some substantial changes to your spending habits, including the use of plastic, you might always find yourself with the burden of debt.

Consolidation helps with the practical aspects of payment, but it also provides you some time to develop new financial skills, such as making a budget and saving for emergencies.

There are four different types of debt consolidation services

  • Debt Management Plan
  • Balance transfer on credit cards
  • Personal loans
  • A home equity loan.

Debt Management is usually the most popular choice as it provides access to credit counselors and financial education classes.

A balance transfer is another popular method, but the ASIC warns that as alluring as those offers may be, they are actually “debt traps”.  They urge consumers to research the various kinds of credit cards and to choose one that has the best interest rate and lower fees (or ideally, no annual fee).

Slash Your Interest Rates

As great of advice as this may be, it does not necessarily help those currently with credit card debt. Should you choose to transfer your credit card balance, keep in mind that the 0% interest does have an expiration date and the transfer fee is between 2%-3% of the balance.

A personal loan may seem counterintuitive, but there are loans with interest rates lower than credit cards. If your credit score is low, you may have a difficult time qualifying for a loan, and you will need to provide collateral.  Loans may carry an origination fee and a pre-payment penalty, so carefully read the fine print.

As for the home equity loan, the interest rates are also low, but you will be using your home as collateral and therefore, should you default of the loan payments, you may lose your home.

Make a Change for the Better

Although this information may appear to be grim, they are valid and helpful solutions to debt problems. There are always pros and cons to difficult decisions, so pick a path suitable for you. Debt consolidation is definitely a better choice than debt settlement unless you have only one creditor.

With debt consolidation, please be patient with yourself and know that it can take anywhere between two to five years to be debt-free.

The pros to debt consolidation definitely outweigh the cons which include the possibility of the payment plan derailing and/or putting yourself further in debt by using your credit cards, which most likely is what put you in this situation in the first place.

Now you are aware of the pros and cons of Debt Consolidation, the most important thing to remember is that there are ways to improve your situation. There are many resources to help you with debt consolidation, so the first step is to make that call or to search online so that you can start the journey out of the fiscal rabbit hole.

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Short Term Loans

Best Ways to Use Short Term Loans for Consolidation

short term loans for consolidation||short term debt consolidation||debt consolidation

Short term loans are becoming more and more popular nowadays for an obvious reason: no one likes to drag on their payments. They want to get it over with as quickly as possible to be debt-free and considering that the application process is so smooth, this option is fairly convenient. You can also use short term loans for debt consolidation. Find out how here.

Moreover, these loans are great for those with bad credit, since they don’t need pristine credit rating to offer you a loan. The downfall, however, is that these loans have higher interest rates than the average loan. Everything “emergency-labelled” possesses some sort of risk, so in order to gain some security, lenders will raise the stakes to keep you paying.

But how can you use short term loans without burying yourself even deeper into a hole of debt? The answer is: use them wisely. You may contact our specialists on 1300 138 188 for a free consultation, if you wish. No matter if you are looking for a loan or some advice, we will do our best to guide you on the right path – and also help you avoid more payments than you can handle.

What Is Debt Consolidation?

Debt consolidation is the process of combining two or more loans into a single payment. If you’re asking yourself what difference would it make, think about it this way: with each loan, you have a particular interest rate to pay. As a result, the total payment in interest will skyrocket into space.

Granted, interest rates in debt consolidation may rise depending on the total sum; but if you can get at least 1% off the total interest, this will help you in the long run to save money – money that you can use on the payments for the actual loan.

helpful

How a Short Term Loan Will Help

Short term loans are there to help people in an emergency. As we may have mentioned, though, these types of loans are unsecured, and therefore, quite expensive. Since the lenders will be put at risk when they offer you money, they will have to turn to a high-interest rate to make sure that they are getting their money back.

Here’s a short list of the pros offered by short term loans:

  • One single payment: Nothing is more confusing than having to pay multiple loans to a lot of lenders. The risk of forgetting to pay one loan is very high, and before you know it, you’ll be staring at your credit history wondering why it looks so horrible.
  • Possible lower interest rate: There’s no absolute certainty that short term loans used for debt consolidation will offer lower interest rates, but let’s say that it’s a high 95% possibility. Used correctly, such a loan will have you paying less for each month.
  • Avoid credit score damage: By using short term loans to pay off your debt, you’ll be less likely to fall behind on your payments, and you will actually be able to stay on track. Over time, this will work to “heal” your credit score, and you’ll be able to gain credibility if you want to go for a regular loan in the future.

You may also want to keep in mind that a short term loan will be helpful only if you take out one of them. The more loans you take out, the more you will have to pay in interest. The solution would be to find some short term loan that will cover your entire debt, without having to resort to other financing sources.

Here’s how the whole process works: you get a short term loan, and the money that you will get will be used to pay off your other debts early. Not only will it help make things easier for you, but if you already had issues with late payments on the previous loans, this option will help fix your history.

avoid-traps

Avoid Getting into a Trap

The secret to avoid getting yourself trapped into a debt cycle is by borrowing exactly the amount that you need, and no more than that. Many people make the mistake of borrowing more than they need, just in case they need it. However, that “just in case” will have you paying more than you were supposed to in interest, which beats the purpose of consolidating. Basically, you are borrowing so that you can make things easier, not over-complicate them.

It’s important that you borrow responsibly so that you do not have any issues paying it back. Borrow from just one lending company to avoid the clutter of interest fees, and before you know it, your payment will be made without any further issues.

In conclusion, short term loans can help you if you want to consolidate your debts into one payment. The only requirement is that you need to be smart about it and not stretch more than your rope can handle. Enquire today and get short term loans for consolidation with Australian Lending Centre.

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Debt Consolidation

What is the Best Way to Consolidate Debt?

debt consolidation

The best way to consolidate debt depends on your needs and financial situation. Here are ways to consolidate your debt to ease your financial burden and build your credit score.

Types of debt consolidation

There are two ways to consolidate debt; through a debt consolidation loan or debt settlement consolidation.

Debt Consolidation

The first type is a type of loan that pays all of your outstanding debts in full so your credit report would show a zero balance on those debts. Instead of multiple loans, you only have one loan. Consolidated loans typically reduce the interest rates and monthly payments but it has longer repayment period.

In debt consolidation, a single large loan is used to pay off several smaller loans. You no longer have to worry if you missed payments on several smaller debts because you only need to make a single regular payment for the new consolidated loan.

While debt consolidation can be a lifesaver, it can also result in bad debt if you don’t know how to manage it. That’s why it is important to look into the interest rate which must be lower than the previous smaller ones, to save money on your monthly payments.

Debt Settlement

Consolidation through a debt settlement means that you engage the services of a debt settlement firm that negotiates settlement with each of your creditor. While they are not offering consolidation loans, they can help you negotiate debts and settlement. Your debt will be settled when the creditor agrees to accept an amount which is lower than what you actually owed.
You may have to draw a check and pay it to the debt settlement firm that then distributes the payment amount to your creditors. You still have multiple loans. But, with proper distribution of payments, you no longer have to worry about creditors running after you.

When is debt consolidation appropriate?

Debt consolidation is for people who want to consolidate multiple accounts into one. They must be willing to pay lower total monthly payments, but a higher total amount of interest and at a longer time to repay all of the debt.  They must also consider closing paid off accounts to avoid the temptation of taking on even more debt and be caught up in the cycle of incurring new charges and getting debt help.

Debt consolidation is not for everyone. It is important to talk to our consultants to know about different options to manage your debts. Remember that debt consolidation is most effective when you are enrolled in our debt management program that will equip you with financial knowledge to avoid future debts. We shall help you create a better financial management strategy that will not only help you get out of debt but enable you to be financially independent.

Australian Lending Centre offers debt consolidation to manage your multiple loans in one easy repayment, with lower interests and it is available to everyone, whether you have good or bad credit. You can take control of your finances by consolidating high-interest loans such as credit cards, medical loans, store cards, cash advances, secured and unsecured debts and other loans.

Contact us today to discover the best way to consolidate debt and for a no-obligation consultation on your eligibility for debt consolidation and other loan options.

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Debt Consolidation Home Loans

Getting Savvy For Better Home Loan Rates

low rate loans

Home loan rates vary a lot from bank to bank and also from year to year. Locking in a low rate can significantly lower a home buyers cost over the long term so getting the best rate possible is one of the most important negotiations that a person will ever have to make. There are lots of ways to negotiate a better rate for purchasing a home but the most effective way is to persistently ask for a lower rate. All lending institutions want to get the most out of a customer as they can, just as much as you want to get the best offer for rates as you can. In these situations, you have the advantage of having all of the lending institutions competing to have you as their customer with their competitive home loans.

Better Home Loan Rates

Simply calling and asking for a reduction on advertised rates is an effective way of getting a reduced rate. If the bank does not immediately reduce the advertised rates then it is possible that they will offer to waive the package fee. Researching the fees and rates of the different lenders will give you the knowledge needed to get your rate as low as possible. Since the banks are competing heavily for your business they are willing to cut deals to get you to walk into their door.

Once you have narrowed down your options, make sure to never take other offers off the table. Another tool you can use is the amount of the loan you are willing to take. Often lower rates are given to larger loans since the banks see it as a way of making a larger profit in the long term. Consolidating other debt with the same institution is another way of bringing down borrowing cost. High credit card rates and car loan rates can be consolidated for a better rate for you and also give the bank an opportunity to have you as a customer on more business. Willingness to take a larger loan and consolidating other forms of debt can work well for both sides of the table.

A bit of homework and persistence can really pay off in what might be the largest purchase of your life so take some time and push for the best deal possible. The bottom line is that advertised home loan rates are negotiable and getting smart about your options can really help your bottom line in the long run.