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Debt Consolidation

Tips on How to Qualify for a Debt Consolidation Loan

Qualifying debt consolidation loan

If your credit score does not meet the minimum requirement of the bank, and you don’t have a regular income and you are spending more than 40% of your income on debt repayments, you may not qualify for a debt consolidation loan. Banks often reject applications of those with unstable income and negative credit entries on their credit report, unless they have sufficient security for the loan. Learn how to qualify for a debt consolidation loans when you have bad credit.

Check your credit history:

If you want to get a cheaper consolidation loan, you need to prepare your credit file. Though bad credit holders can still obtain affordable loans, it is advisable to know what’s inside your credit file. For all you know, you are just having a bad credit score because of wrong and inaccurate entries. It will also give you time to explain to your potential lender why and how you ended up with that score.

Many lenders understand that some life events can hold you back financially. Use the information in your credit file to explain your circumstances and to convince your lender that you are still capable of making payments despite certain financial setbacks in the past. So, grab that file and use it to have a better negotiation with your lenders. Get the loan product and loan arrangement that could help you get away debt-free after the repayment term.

You want to get rid of debts:

If you wait for a longer period to deal with your debts, it may get out of hand. Debt consolidation is advisable for those who are awaiting a crisis if they don’t eliminate the debts. It is true that bad credit is a huge issue in taking the loan. But, if you choose the right lender you can get access to the much-needed consolidation loan without making your credit score an issue.

Let’s say you have previous debts under five different lenders. Now instead of paying monthly instalments to each of them, you will get a consolidation loan pay the instalments to that new lender. The main purpose of taking the loan is to save money by eliminating all those debts with a higher interest rate in exchange for a bad credit debt consolidation loan with a lower interest rate.

Present valuable collateral:

Do you have a new car, boat, home or any pricey asset that the lender can sell or liquidate in the vent you default on payments? If you want quick approval loans, secure your consolidation loan with a pricey asset. Lenders no longer bother to look at your credit score when you secure the loan. They may also give you affordable interest rates which are comparable to the rates offered by banks. In fact, you may get around 14% APR or lower with good security.

You have a good repayment plan in mind:

While this is not a requirement per se, it is advisable to have a plan before you apply for a loan.

Some debt consolidation companies offer their services to borrowers who are struggling with debts. But, you can do it yourself. In fact, if you have a sound debt repayment plan in mind, you simply need to apply for a loan to consolidate your other smaller loans, and you can repay it within the allotted time frame.

Debt consolidation is only a suitable option for those who want to end up with more cash at hand at the end of the month, and with lesser debts to pay off. It is because there are many people who tried to consolidate their loans but ended up with more debts because they have chosen a poor debt structure and they don’t have a sound debt repayment plan in mind.

So, here are some questions to ask yourself before planning to consolidate your loans:

  1. Do I have the discipline to avoid using my existing credit cards the moment I paid them off with my consolidation loan?
  2. Can I stick with my debt repayment plan so that I will not end up with more debts in the process?
  3. What will I do to increase my income?

A loan is a loan-regardless of its type. That means you have to pay it back. Make sure that you use the proceeds of the consolidation loans wisely, not only to repay all your high interest and smaller debts, but to improve your financial life as well.

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Debt Management

The Wrong Ways to Pay Off Your Debt

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Being in debt can be stressful, no one denies that. And the pressure can place you in a range of challenging positions, forcing you to cave in and make the wrong financial decisions. Embracing the right ways to pay off your debt is more than mandatory.

But how do you know which are those? Well, you must get acquainted with the practices that should be avoided, and this is what we’re going to discuss in today’s article. Keep on reading to discover the wrong ways to pay off your debt.

Consolidate with a high-interest loan

Debt consolidation makes sense when the financing solution provided by the lender is actually favourable. If the loan terms are convenient for your financial situation, you should go for it. Nonetheless, choosing debt consolidation for the wrong reason and failing to analyse the implications of the term will do you more harm than good.

In the case in which the only loan you can obtain has an interest rate that is higher than your credit card debt, you should leave it aside.

At first, you may believe that your monthly repayments appear lower with debt settlement. Nonetheless, that is only because the loan has an extended timeframe. If you were to calculate the interest you’d end up paying during the life span of the loan, you might come to realise that such a solution is not the best. So, this is definitely one of the wrong ways to pay off your debt.

Misusing your home equity loan

The second on our list of one of the worst ways to pay off your debt: choosing a home equity loan. Even though you may assume that this could be the answer to all your problems, this is not always the case. Of course, there are many situations in which this option actually works. As always, everything depends on each person’s financial conditions.

However, if you’re struggling with high-interest credit card debt, you should pinpoint the root of the problem. For example, your debt situation might be a result of reckless spending and poor money management skills. If you don’t aim at solving the problem from its root, you are prone to end up in this exact scenario in a year or two. So, it goes without saying that a home equity loan won’t work as long as you don’t fix the underlying issue. In the case in which the loan ends up being unaffordable, you might lose your home as well.

Choosing the support of a debt settlement company

Accepting the guidance of a debt settlement company is, without a doubt, one of the most unfavourable ways to pay off your debt. As it is expected, these kinds of businesses advertise as being the solution to everybody’s money related problems. Nonetheless, after you manage to settle your debts, by paying significantly less than you owed, your credit rating is terrible, and you’re back where you started. Not to mention that we’re talking about a lengthy process. Even if your attempt is successful, you’ll have to work on rebuilding your credit score for years.

So, try to stay away from the methods mentioned above. There are other ways to pay off your debt without affecting your credit score in the process. Speak with a financial expert like Australian Lending Centre who offers free consultations on paying off debts and managing people’s finances.Save

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Debt Consolidation

When Is a Debt Consolidation Loan Feasible?

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Debt consolidation loans are meant to pack multiple small loans into one that is more manageable. It is one of the most common forms of debt relief. However, not many people seem to know when a debt consolidation loan is feasible.

There are some things you must take into consideration when you’re tempted to amass your loans into one.

So when is a debt consolidation loan feasible?

  1. When you pay extremely high-interest rates

Credit cards, usually, have the highest interest rates. When you need to pay a lot of interest, the debt is growing at an alarming pace, faster than you can repay it. Debt consolidation loans, on the other hand, might offer you better interest rates altogether. If you pay more than you can afford in interest, you should definitely consider a consolidation loan.

  1. An endless number of bills

Getting tons of bills can make it so easy to forget to pay a certain debt. You simply cannot keep track of everything. A consolidation loan is feasible if you’re in such a situation since you’ll be receiving just one bill until you’ve dissolved your debt. This will automatically lead to better management of your time and money.

  1. When the loan is unsecured

If a loan is “unsecured,” it means that it is not attached to any of your assets, like your house and car. Secured ones are certainly not a good idea because if you fail to repay the debt, you could get homeless or devoid of the asset you’ve secured the loan on. Try to stay away from secured loans at all times. It’s just better to find another way to pay your debt without risking your house as collateral.

  1. When you’re willing to repay for a longer time

Debt consolidation loans allow you to pay less than you paid on your previous debts, but that means that the repayment is going to take longer. Are you willing to do that? This can be a hassle for some people who want to get it over with as fast as possible. Still, if you have no problem with that, then you should consider taking such a loan.

  1. When you don’t end up paying more interest

Yes, it is possible to end up paying more interest on a consolidation debt than you would’ve paid for all the other separate loans. Surely, that will impact your credit score if you fail to pay. And before you know it, your credit rating will be so damaged that you will find it even harder to get another loan in the future.

Debt consolidation loans can truly be a great help, but you must know when you need them. Moreover, there are many other aspects that come into play, like the ones mentioned above. So, review your situation thoroughly before you take such a debt consolidation loan because it can have disastrous consequences if you go for it lightheartedly.

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Debt Consolidation

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

Debt Consolidation Loans

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

Are You Falling for these Debt Consolidation Traps?

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Do you feel burdened by several credit card debts and other outstanding loans and you think debt consolidation could provide some serious relief? Debt consolidation is a new loan that allows you to pay off your multiple balances in one monthly payment. It doesn’t erase all your debts but simply makes it easier for you to repay. So, if you want to have a clean slate for keeps, make sure that you don’t fall into these debt consolidation traps:

Ignoring the cause of your debt problems.

Debt consolidation helps people manage the repercussions of bad debts. But it is just a temporary solution to your problem. Addressing the root cause of your debts, such as your lifestyle, money-management issues and other related things can help you analyze why you sunk in debt and how you can get out of it.

It is important to ask yourself, “What got me into a pile of debt?” Remember that it takes a while before debts become unmanageable. It is almost impossible to come up with a quick solution to internal debt issues when you fail to see where and how it started.

Debts did not grow overnight so unless you come up with a concrete idea with what got you into a financial mess, the same situation is likely to repeat itself.

Australian Lending Centre has in-house professionals to help you in retracing your financial actions. We can help you with our debt management plan and debt consolidation loans to deal with your present debts as we help you identify your spending habits.

Perhaps you were taking high-interest loans without knowing it or you are not paying your loans right. In other cases, the problem could be as simple as forgetting the due dates or the existence of debts itself.

Not making a proactive effort in searching for the best consolidation loan.

Here are some factors that you need to consider when choosing a loan consolidation program:

    • all of your outstanding debts
    • interest rates
    • lenders’ willingness to negotiate a lower rate
    • consolidation options

Consolidating debts has its own implications. Some lenders offer rates and fees that creep up over time. Others will charge you hefty fees that may put your assets in line in exchange of deceiving interest rates.

Australian Lending Centre gives you different options to pay for your debts. If you want to pay a lump sum to settle all your debts for less than what you actually owe, we can help you do that. You can also talk to us about our debt management program and see whether or not it can work for you. A debt management plan usually involves making an agreement with your creditors to consolidate the full amount of your loans. The negotiation is successful if you get lower interest rates or longer repayment period.

Thinking that you are finally out of debt.

Debt consolidation is still a loan. While you no longer have to deal with angry collection calls and you are not pestered with high-interest credit card bills, you cannot go back to your old habits. One of the big debt consolidation traps is forgetting he your debt problems were caused in the first place. Avoid falling back to maxing out your credit cards once again. Don’t give in to the temptation of charging all of your credit cards with zero balances once again, especially if there is no urgent need to do so.

Bear in mind that you still have a substantial amount of outstanding debt. So, if you cannot close most of your credit cards leave them at home and put only your low-charging credit cards in your wallet for emergencies.

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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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Credit Card Consolidation

Credit Card Spending was up in 2010

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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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