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Debt Consolidation

Questions You’ve Had about Consolidating Debt But Haven’t Asked

Debt consolidation is regarded with kind eyes by many Aussies and often described as a solution to all of your problems. Just like the name says, debt consolidation refers to putting all of your debts together, in order to keep track of your payments easier. But perhaps you have questions about consolidating debt. Maybe you are unsure how it works and confused about how you can save money by choosing this finance option.

In this article, we reveal all!

Is Debt Consolidation the Right Choice for You?

If you’re making multiple payments per month, then you know by now that each comes with different interest rates and fees. In this case, yes, debt consolidation is the right call. Also, by consolidating your loans, you will always have to make one monthly payment, instead of sending money to a number of lenders.

Here are the top 6 questions about consolidating debt:

  1. Can I combine my home loan with my personal loan?

Consolidation allows you to combine all of your loans into a single one, regardless of their type. Keeping track of your home loan, car loan, personal loan and so on can be tiring. This is a time-saving solution.

  1. How will consolidation benefit my expenses?

Some loans have bigger interest rates than others. By combining them, you will have a fixed rate that you’ll pay monthly. This way, you’ll know exactly the amount you’ll have to repay, without also having to deal with various taxes and fees that accompany each loan.

  1. Am I eligible for consolidation?

Everybody can choose to consolidate their debt. Still, check with your lender and see if your home loan allows you this option. If not, try to change the features or simply look into a refinancing that incorporates debt consolidation.

  1. Is it better to pay my car loan in 30 years?

When you combine all your loans, you can choose to prolong the payments, in order to fit your home loan. Unfortunately, even though your rates will be lowered considerably, the interest fees will expand due to dividing the car loan for example, over a period of 30 years. You can adjust the debt consolidation to fit your needs.

  1. Should I consolidate if I have bad credit?

This is actually the main reason why people consolidate their debts. Debt consolidation tells lenders that you have placed your affairs in order and are serious about improving your financial situation. Also, it will enhance your credit score.

  1. How can the equity in my home help?

Through debt consolidation, the equity in your home can reduce significantly the interest rates you’re paying each month. Being a secured line of credit, a home equity loan will use the equity in your home as collateral, which can lead to a fixed and smaller interest rate.

If you’re having financial problems and can’t afford to pay back all your loans, expanding the loans over a longer period of time will help you get back on your feet by paying less each month. So, talk to your lender about this option.

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Debt Consolidation

What is the Best Way to Consolidate Debt?

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

Top Questions to Ask Yourself before Consolidating Your Debt

Debt consolidation is the process that gathers the total amount of your outstanding debts into one single loan. As with any other financial procedures, it may or may not work for you. The key is to know what to look at to ensure that you’ve made the right choice for your personal background. Here are some top questions you should ask before consolidating debt.

  • Can you afford to pay the debt?

First and foremost, you need to evaluate the immediate effects linked to debt consolidation. What impact will it have on your financial situation? Will it help you to manage your finances better or make you lose absolute control of them?

  • What is the primary purpose of the loan?

The first thing you should do is to distinguish between what you want and what you need. Only because you want something really badly, this doesn’t mean you should immediately borrow money for that, unless it is actually relevant. Also, be mindful especially if your loan involves a third party such as a family member or friend in the position of a guarantor.

For this kind of loans, you are held responsible in case of non-payment or defaults. What is more, if you’re considering taking a loan in order to pay your utility bills, you should discuss the matter with your financial provider. He/she will give you an expert insight into the issue.

  • Can you manage to make the repayments?

This is one of the most important questions to ask when looking at consolidating debt. You should make sure that taking up a loan is the right choice for you. Also, see if you can manage to make the repayments in your current financial scenario. If you anticipate that you can work on diminishing your monthly expenditure, we recommend you to do that before actually seeking to take another loan.

It’s also highly recommended to factor in possible interest rate increases, and unprecedented changes in your circumstances and budget.

  • How does your credit report look?

Note that credit providers will always evaluate your credit file in order to appraise your capacity of repaying the sum within a given timeframe. Considering that you can obtain a copy of your credit report free of charge, you should do that in advance, to ensure that there aren’t any mistakes.

It may seem like common sense, but you should bear in mind that debt consolidation is still debt, and you should treat it as such. It is a decision that can be really helpful to numerous individuals, but it requires a lot of thought. So, the verdict is entirely up to you, your budget and personal specifications. Make sure you establish a financial goal and craft a realistic schedule for paying off your debt. Sometimes, we ought to embrace a range of changes to diminish debt, and this applies in all cases.

Bear in mind that each situation is distinct, and you can always discuss with a financial consultant before making a call. After weighing the pros and cons related to debt consolidation, you’ll be sure that you’ve made the right decision.

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Debt Consolidation Credit Card Consolidation

Credit Card Debt Growing in Australians Aged Between 34 – 54

It is no surprise that Australian consumers between the ages of 34-54 have been cited as the biggest contributor to the near-record Australian national credit card debt. Half of the surveyed group named as Generation X which comprised of 1200 Australians admitted that they made up to three unplanned purchases using their credit cards each month. The research also showed that Generation X Australians are the least likely to pay off their credit card purchases in full each month. The effects of this is evident in the $51 Billion credit card debt in Australia, $33 billion of which is accruing interest, costing consumers more than $540 million a month. That is a whole lot of money being wasted on interest charges and the individual debt contributing to the national debt on credit cards.

The credit card debt growth in majority of Generation X is growing at an alarming rate. More and more Gen X Aussies are racking up credit card debt and not making regular repayments. In the end they get bad credit ratings and the only viable solution is debt consolidation. This process can help eradicate bad debts and in the long run increase credit rating. It is clear that Australians need help in order to stay financially stable. Although this sounds like a dire situation there is hope; there are a lot of consolidation companies who can help re-align finances.

Credit Card Debt in Gen X

Generation X probably has the most number of financially troubled people in it. It may be because of the financial burden they carry on their credit card debt. This is in fact the age group where credit card use has been most rampant and has done so irresponsibly too. This is also the group that is currently in extreme need of debt consolidation loans. Why opt for debt consolidation? Because new loans may result in a lower interest rate which means lower payment on your part. This also means it will be easier to pay off old debts and repair credit rating in the process. Getting a debt consolidation loan is where you will take out a new loan to pay off a number of other debts you have made in the past. It is undoubtedly a good solution to a bad credit problem. The process may be a little confusing so it is best to seek the help of professionals who have extensive experience in help out people with bad debts, especially credit card debt.

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Debt Management

Government Survey Gives Insight into Australian Debt

It seems Australians are not entirely money-conscious when it comes to entering into debt, as a recent Federal Government report has found. In this article, we take an insight into Australian Debt.

The latest survey conducted by the Financial Literacy Foundation has divulged details about the general attitudes towards credit and debts amongst the Australian population.

The nationwide survey found, 21% of respondents will get into debt by buying things they cannot afford, and 17% pay only the minimum amount owing on their loans.

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Credit Card Consolidation

Credit Card Debt on the Rise

Banks are hiking credit card interest rates, forcing many consumers into debt. This has put credit card debt on the rise.

Recent research from a National newspaper suggests that at least 5 major credit card providers have increased their interest rates within the past three months. This comes as a rude awakening for many as the Reserve Bank’s recent cash rate cuts of 2% should have seen the interest rates for credit cards drop.

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Credit Card Consolidation

Australian Credit Card Debt has Risen

The rising levels of credit card debt in Australia reached record levels in 2011. However, the number of repayments aimed at reducing credit card debt drastically fell.

While facing rising unemployment and a looming recession, Australians cut back on their credit card repayments by 7.1% in February. Australian credit card debt grew by 1.7% to a record $45.4 billion, equating to an average debt of $3,149 for every cardholder in the country.

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News

Credit Card Reward Program Can Increase Debt

Reward credit cards can be a great tool as they allow consumers to earn points on charges that can be turned into perks such as cash back, air travel and merchandise.  According to the credit card companies, the more you spend the more you will get back in reward points; however this is not always the case.

A majority of people use credit cards as a tool to make purchases such as airfares, accommodation, concert tickets, and general online or over the phone payments.  However for consumers who let the promise of perks drive them to overspend, a rewards credit card can end up costing them significantly.

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Debt Management

Australia is a Cash Based Society

The Reserve Bank of Australia has conducted a recent study that indicates that Australia is still a cash based society. However it is not to be overlooked that the use of credit cards continues to rise.

The RBA study of consumer payment behaviour found that cash accounts for 70% of all transactions. EFTPOS, MasterCard, and Visa Debit Card payments make up 15% of all transactions followed by MasterCard and Visa Credit Card transactions at 9%. Only holding 1% of total transactions is American Express and Diners Club cards.

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Credit Card Consolidation

Australian Credit Card Figures Increasing Higher Than Ever

The total value of credit card and charge card transactions, including cash advances, rose by 9.6% in March this year. Australians spent $18.78 billion on their credit cards and charge cards in March, up from $17.13 billion the previous month.

In February total credit card and charge card balances outstanding fell by 1% to $44.358 billion, from $44.799 billion. The value of cash advances on credit cards and charge cards increased by 7.4% to $1.034 billion in March, from $963 million in February. The number of credit card and charge card accounts increased by 11,000 in March, while the number of purchases using credit cards rose by 13.3%.

Total credit card and charge card balances outstanding rose by 4.3% over the past 12 months, compared with an average of 12.6% over the preceding five years.

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Credit Card Consolidation

Credit Card Spending was up in 2010

2010 saw Aussies coming out of the Global Financial Crisis (GFC) with their credit cards surging.  In July, there was a banking report that stated we charged goods to our credit cards an astonishing 131 million times for the month.  This figure is greater than any July in history and 3% higher than July 2009.

In addition to putting more on our cards, we are also being more careless about increasing our debt.  In this same report in July, Aussies owed $47.8 billion which is approximately $3,268 per credit card.  These figures were up 6.5% from 2009 or $159 per card.  These are signs Australians spent 2010 thawing from the financial crisis and seem to be spending at a fast rate.  If these figures continued in trend, Aussies may find themselves deep in debt.

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Refinance and Refinancing

Borrowers Refinance While Rates Are Still Low

With interest rates broadening between loan providers and some borrowers feeling frustrated with a lack of customer sympathy from their lender, now is the perfect time of year to decide whether you can work within the features of your current mortgage to improve your cash-flow, or if you’re better off opting to refinance to a new home loan that better meets your needs today.

When considering whether the time is right to refinance, it’s important to know that there are a range of options that mean you can save over the long term.

Refinance Options:

  1. Refinancing to a lower interest rate than you presently have. It goes without saying that a lower interest rate means you will save money, but also consider the Reserve Bank of Australia will most likely increase interest rates again in the coming months so grabbing your opportunity of a lower rate now is sensible.
  2. Switching to fortnightly payments instead of monthly, which not only lessens the impact of paying one large lump sum each month but also means your home loan will be paid off sooner.
  3. Refinancing can also include consolidating any credit card debt, store card debt and personal loan debt (which is accumulating high interest) into your mortgage. Refinancing these debts into your new home loan will allow you to concentrate on paying off one lower interest loan and can possibly save you thousands.
  4. Refinancing can allow you to switch to, or from a variable or fixed rate home loan. You may want to take advantage of a low variable rate while it’s available, or perhaps you would prefer to lock in an interest rate you’re comfortable with by choosing a fixed rate which can reduce the risk of higher repayments in the future.
  5. Another option is directing any savings from other accounts into your mortgage, consequently lowering the principal and reducing your repayments.

Another reason many Aussies are choosing to refinance is to gain access to the equity in their homes. This can be done for a variety of reasons, but commonly people are unlocking their home equity to renovate, purchase an investment property, take a holiday, plan a wedding, purchase a vehicle, pay some outstanding bills or simply to have some extra money to play with.

Another end of financial year is upon us, so if you can benefit from refinancing, now is the time to get your financial affairs in order. Simply fill in an enquiry form to your right or contact one of our refinancing consultants today on 1300 138 188.+++

 

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Credit Card Consolidation

Consolidate Your Credit Card Debt

Consolidate your credit card debt could be one of the smartest decisions you will ever make.

Get on top of credit card debt

Credit card consolidation is a good way to get on top of your debts and ensure a better credit situation for the future. Consolidation is becoming increasingly popular since the Australian Government introduced Part IX Debt Agreements to assist those that are currently in financial difficulty.

Use credit cards wisely

Credit cards, if used properly, can be great to have. However, if you are an emotional spender, not financially disciplined or not careful with your spending it is very easy to rack up debt before you realise you have a problem. It can sometimes take you months and possibly even years to get out of debt.

Understanding the true extent of your debt

If you feel that it is time to get your debts under control and do something about them, there are professionals who will assist you with the task of consolidating your credit card debt. The first thing to do is to look at your debt, and see exactly how much you owe. If you know what you owe and who all you owe it to, it will be much easier to get help.

Don’t leap into a Part IX Debt Agreement without exploring all other options

Before you consider entering into a debt agreement it is often useful to look at the credit card market and see if you can consolidate your current credit card debt onto a credit card with a low or even 0% interest rate.

Beware of additional fees

It is important to be aware of additional fees you may incur when taking out a new credit card. However, if you are in a situation where you can not manage your debt, another credit card may not be the best solution. In this case, you could consider a debt agreement. This is a legally binding agreement between you and your creditors where you arrange to pay off as much as you can afford each month.

If you are in a position where you are trying to pay off a few credit cards, consolidation will put everything into one bill, therefore, making it easier for you to pay. Paying just one bill can help you save a lot of time, as well as preventing stress.

Only consolidate debts if you can reduce the overall amount of debt

Consolidating your credit card payments into one bill can make your finances more manageable; however, you should never do it for that reason alone. If doing this will result in you paying back more, then it is not a good idea. You need to consolidate your debts in such a way that you will reduce your overall monthly repayments.

If you would like professional assistance consolidating your debts feel free to contact the Australian Lending Centre on 1300 138 188.