Tag: Debt Consolidation

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Debt Consolidation

A Visual Guide to Debt Consolidation: How to Streamline Your Finances

A Visual Guide to Debt Consolidation: How to Streamline Your Finances
Consolidate multiple debts with our guide to debt consolidation.

Debt consolidation can be a powerful tool if you’re juggling multiple high-interest loans, credit card balances, or other forms of debt. Our guide to debt consolidation shows how combining everything into one manageable repayment can reduce your monthly costs and simplify your finances. In this post, we’ll walk you through the process step by step and provide a before-and-after snapshot of your financial situation, illustrating potential savings on both interest and monthly payments.

 

1. Understanding Debt Consolidation

Debt consolidation essentially involves taking out a new loan or line of credit to pay off your existing debts. Instead of juggling multiple bills and due dates, you’ll have one monthly repayment, often at a lower overall interest rate.

Key Benefits of Debt Consolidation

  • Potentially lower interest rates
  • Single monthly repayment instead of multiple bills
  • Simplified debt tracking, reducing the risk of missed payments
  • Possible improvement to your credit score if you consistently pay on time

2. The Step-by-Step Process

Step 1: Take Stock of Your Debts

Create an inventory of all your debts—including credit cards, personal loans, store cards, and any outstanding balances. Record the current balances, interest rates, and monthly payments associated with each.

Take Stock of Your Debts

Step 2: Explore Consolidation Options

You have several pathways for debt consolidation:

  1. Personal Loan: Often unsecured, meaning no collateral is required. If you secure a lower interest rate, a personal loan can reduce your monthly outgoings.
  2. Balance Transfer Credit Card: Some credit cards offer an introductory 0% or low-interest period on transferred balances, which can save you money on high-interest debt.
  3. Home Equity Loan (if you own property): Using the equity in your home as collateral could offer lower rates, but this option carries the risk of losing your home if you can’t make payments.
  4. Debt Consolidation Company: Specialised firms that help negotiate lower rates and unify your debts into one package.

Step 3: Select the Best Fit

In this stage of your guide to debt consolidation, choose the option that aligns with your budget, credit score, and long-term goals. Look for lower interest rates, minimal fees, and repayment terms that make sense for both your current and future financial plans. You can use tools like Finder, to compare loan options, interest rates and fees.

Step 4: Apply and Pay Off Existing Debts

After approval, use the new loan or credit line to clear your existing balances. Make sure to:

  • Close or limit access to the original high-interest accounts (especially if you’re tempted to spend more on these lines of credit).
  • Keep a record of each debt being paid off for proof and peace of mind.

Step 5: Stick to Your New Repayment Plan

One of the biggest advantages of consolidation is having just one bill to manage. Set up auto-pay or reminders to ensure you never miss a payment, which could otherwise affect your credit score.

Stick to Your New Repayment Plan

3. Before-and-After Snapshot

A before-and-after comparison is one of the best ways to see how debt consolidation might lighten your financial load. Imagine you currently have:

  • Credit Card 1: $3,000 balance at 18% interest
  • Credit Card 2: $2,000 balance at 20% interest
  • Personal Loan: $5,000 at 15% interest

Before Consolidation

  • Total Debt: $10,000
  • Monthly Repayments: $600 (collectively, on average)
  • Weighted Average Interest Rate: ~17%

After Consolidation (Example)

  • Debt Consolidation Loan: $10,000 at 10% interest
  • Monthly Repayment: $450
  • Interest Rate: 10%

Before and After Snapshot

By lowering the interest rate from 17% to 10%, you could save hundreds—if not thousands—of dollars in interest over the loan’s term. Not only that, but with one monthly payment of $450 instead of three separate payments adding up to $600, you’re potentially freeing up $150 per month that could go toward an emergency fund or other financial goals.

4. Potential Pitfalls to Watch Out For

While debt consolidation can be a lifesaver for many, it’s not a one-size-fits-all solution. Keep in mind:

  • Fees and Charges: Some consolidation loans have application or ongoing fees.
  • Unchanged Habits: Consolidation doesn’t fix overspending habits; you’ll need a solid budget to avoid falling back into debt.
  • Longer Repayment Term: While a lower monthly payment sounds appealing, stretching the repayment term means you might pay more in total interest over time, depending on your arrangement.

Debt consolidation can simplify your finances by merging multiple debts into one manageable payment—potentially at a lower interest rate. In this guide to debt consolidation, visual aids like charts and infographics help you see exactly where your money is going, how consolidation could benefit you, and the steps you need to take for a smoother financial journey.

If you’re considering debt consolidation but aren’t sure where to start, Australian Lending Centre can guide you through the process, from comparing loan products to creating a tailored repayment plan. By making informed decisions and leveraging the power of visuals, you’ll be well on your way to regaining control over your financial future.

Ready to reduce your debt stress? Get in touch with our team at Australian Lending Centre today to discuss your consolidation options. Let’s work together to map out a plan that fits your needs and helps you achieve long-term financial stability.

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Debt Consolidation

Why Choose Debt Consolidation?

Why Choose Debt Consolidation
We explain how debt consolidation could be the solution you've been dreaming of.

In the journey towards financial stability, debt consolidation emerges as a beacon of hope, offering a streamlined path out from the maze of multiple debts.

It’s a process that simplifies your financial obligations and can turn your life around by providing a clear roadmap to becoming debt-free. But why choose debt consolidation?

Understanding the Process of Debt Consolidation

Debt consolidation involves combining multiple debts into a single, manageable loan. This process typically results in a lower overall interest rate and a simplified payment schedule.

Instead of juggling various payments with differing interest rates and due dates, you’ll have one consistent repayment to focus on.

Transform Your Finances

Transforming Your Financial Landscape

So why choose debt consolidation? Imagine waking up each day with a clear picture of your financial obligations. Debt consolidation can offer you that peace of mind.

By merging your debts, you simplify your payments and potentially reduce the amount of interest you pay over time.

This can free up your finances, allowing you to invest in your future, whether that’s through education, home improvements, or saving for retirement.

Example of Successful Debt Consolidation

Meet Sarah, a Sydney-based graphic designer who struggled with several high-interest credit card debts totalling $20,000. Each card had different repayment terms and interest rates, making it challenging for her to keep track of her finances and causing her considerable stress.

Sarah decided to take control of her situation by opting for debt consolidation. She applied for a personal loan with a lower interest rate and used it to pay off all her credit card debts. This move allowed her to replace her multiple high-interest debts with a single loan, resulting in one manageable monthly payment.

By consolidating her debts, Sarah was able to focus on her career and personal life without the constant worry of her previous debts. Her credit score improved over time due to the consistent, on-time payments, and she was on a clear path to financial freedom.

Example of Successful Debt Consolidation

Why choose debt consolidation? The benefits are immediate:

  • Simplified Finances: Sarah no longer had to remember multiple due dates or deal with various creditors.
  • Interest Rates Savings: The consolidation loan had a significantly lower interest rate than her credit cards so she paid less over time.
  • Improved Cash Flow: With lower monthly payments, Sarah found herself with more disposable income each month.
  • Stress Relief: The clarity and simplicity of having just one debt reduced her financial anxiety significantly.
  • Credit Score Improvement: Because making payments became easier, Sarah didn’t miss any repayments and her credit rating was enhanced as a result.

Exploring Alternatives to Debt Consolidation

  • Budgeting: If your situation isn’t too severe, creating and sticking to a budget can help manage debts without the need to consolidate.
  • Informal Debt Agreement: Less structured than Debt Consolidation, it involves a similar process of reducing repayments and managing only one debt.
  • Debt Agreement: Negotiating with creditors to settle debts for less than what is owed. This comes with eligibility requirements and other factors to consider.
  • Financial Counseling: Seeking advice from credit counselling services for a structured debt management plan.
  • Bankruptcy: As a last resort, bankruptcy can provide a fresh start but has long-term credit implications.
  • Financial Advising: Working with a financial planner to create a long-term strategy for debt repayment.
Eligibility Criteria for a Debt Consolidation Loan

Eligibility Criteria for a Debt Consolidation Loan

To be eligible for a debt consolidation loan in Australia, applicants typically need to meet the following criteria:

  • Age: Must be over the age of 18.
  • Residency: Should be an Australian citizen or a permanent resident.
  • Income: To ensure the ability to repay the consolidated loan, you must have a stable source of income (some lenders accept Centrelink).

It’s important to note that while these are common criteria, specific lenders may have additional requirements.

Before applying for any form of finance, the first step should be to check your credit score, eligibility, and the best options available.

The Australian Lending Centre offers bad credit debt consolidation if you have bad credit.

Partnering with Australian Lending Centre

Debt consolidation is not just about combining debts; it’s about reclaiming control over your finances. It’s a strategic move that can lead to a more secure financial future.

If you’re considering this path, then the Australian Lending Centre could be your solution.

With our expertise, you can navigate the consolidation process with confidence. We offer personalised solutions, ensuring that the consolidation plan fits your unique financial circumstances.

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Debt Consolidation Debt Management Financial Planning

10 Steps To Get Out of Debt Fast

debt free
As daunting as it may feel, there are ways to escape debt (and it's easier than you might think).

If you find yourself in debt, it’s important to remember you aren’t alone. Whether you have made bad financial decisions, or things beyond your control have occurred, such as unemployment, injury or illness, there are ways to get out of debt quickly.

There are many benefits to getting yourself out of debt, such as an improved credit score and improved mental health. So while it may feel daunting at first, a simple few changes can make a huge difference to your lifestyle. Here are 10 steps to get out of debt fast.

10 Steps to get out of Debt

1. Put your debt in perspective

The first of 10 steps to get out of debt fast is to look at where you currently are. Answer the following questions:

  • How much debt am I in?
  • What interest am I paying on these debts?
  • How many debts do I have?

If you can make a note and get a clear head about where you stand, you can prepare a way forward to get on top of it.

2. Set a budget

This is the best way to oversee your finances. It takes into account how much you are spending each month and on what. Start by writing down your income, and all your fixed expenses each month. This includes insurance, medical and food, dining out and entertainment.

Take this away from your income and see how much is less. If it’s less than zero, then you can clearly see you are spending more than you earn and need to make some changes. See where you can cut down. Then, allocate a certain amount to paying off your debts. If you are after a spreadsheet to note all this down, there are plenty of free options on the internet.

3. Start paying!

Start paying off from highest interest rates to lowest, this will save you money in the long run. It is referred to as ‘avalanching’.

This means paying off the debts that are costing you the most in interest will be done first, before tackling the next one.

4. Lower your interest rates

Next, it is worth looking at whether you can lower your interest rates. Having high interest rates can make it much harder to pay off the debt. The easiest way is to contact your lender, and simply ask.

If you have a good history of paying off your payments, it can help you succeed.

5. Consider Debt Consolidation

If you don’t manage to lower your interest rates, consider debt consolidation. This is the process of taking out a single loan to pay off all your other loans.

It has the advantage of getting you a better interest rate and helping you keep on track with paying off your debt. Everything is in one place, and you make one payment a month – not multiple.

get out of debt

6. Pick up a side hustle

One of the fastest ways to get out of debt is to make more money. Ever considered renting out a room in your home? Perhaps you have a hidden talent that can get you some extra work on the side? Now is the time to pick up as much work as possible to pay back your debt in a timely manner.

7. Put away those credit cards

The one thing you don’t want while trying to pay off debt is to go into even more debt. Hide those credit cards so that the temptation won’t even be there. Out of sight, out of mind.

8. Sell, sell, sell

Another great way to earn some fast cash is to sell things you no longer need around your home. You can use eBay, Gumtree or even Facebook marketplace to list your unwanted goods. This could give you a good cash injection boost to get you started.

9. Ask for help

If you have made all these changes but are still struggling, ask for help. Speak to your lender and see if you can renegotiate the terms of your debt.

You may even reach out to the family for a helping hand to get you through a bad period. Getting a boost to start you off can be all you need when getting out of debt.

10. Debt Relief Services

After exhausting all of your other options, there are a few other avenues you can go down to get out of debt. These include:

  • Informal Debt Arrangement:
    • This form of debt relief helps to make your debt repayments affordable and manageable.
    • A debt administrator acts on your behalf to combine debts and reduce repayments (therefore stretching out loan term).
    • Doesn’t leave a mark on your credit file. Instead, it can improve your credit score over time.
  • Part IX Debt Agreement:
    • This is under the Bankruptcy Act 1966.
    • Involves a formal agreement being put in place between you and your creditors.
    • Your total debt amount is reduced and payable between 3-5 years.
    • Qualification criteria apply.
  • Bankruptcy:
    • This should always be a last resort.
    • Bankruptcy is a legal process for insolvency.
    • You are discharged from most or all debts, but there are significant consequences, including difficulty with employment and rental application approval.
    • Bankruptcy stays on your record for 5 years.
    • Always seek professional advice before considering bankruptcy.

Get support for your debt-free journey

Looking for some professional debt help? Speak to the experts at the Australian Lending Centre.

We could help you pay off your debts and get back on track. By following these 10 steps to get out of debt, you will be able to change your lifestyle and live within your means in no time.

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Short Term Loans

5 Benefits Of Short Term Loans

benefits of short term loans
benefits of short term loans

Taking a loan isn’t proof that you aren’t administrating your finances well or that you aren’t earning enough money to support your family. A loan is a great method that offers you a way out of a problem! In this article, we discuss the benefits of short term loans.

A short-term loan solves the issue immediately and without all the fuss that comes with larger loans. If you need the money to pay for medical expenses, house reparations or an unplanned trip visit to your family, that’s what short term loans are all about!

5 benefits of getting short term loans

They are manageable!

You can take a $500 loan and that’s it! Small loans were made to fix urgent matters, so take advantage of them! Short term loans won’t keep you up at night thinking how you’re going to manage interest rates and any other additional fees.

Unlike large loans that pose problems and can disrupt your finances, a small loan will help you out. Not being able to make payments on time and worrying about a bad credit score won’t be an issue when you deal with such short-term loans.

Online application

This is one of the biggest benefits of short-term loans. You can fill out a form on the Internet and wait for the money. Skip the road to the bank office and staying in line for hours. This type of loan comes with an online application that will only take you a few minutes of your time while doing it in the comfort of your own home.

Access the funding fast

Skipping the fuss that comes with larger loans also means getting the money faster! This is actually the exact purpose of short-term loans. They have been created for urgent matters that can’t be planned ahead. In just a couple of hours, you can receive the money and sort out your financial difficulties! It’s that simple!

You can customise your payment plan

You can borrow only the money you need, considering that a short-term loan doesn’t come with a fixed sum of money. If you think you’ll be able to pay it back in 3 months, settle a 3-month payment plan. If a 5-month plan sounds better, go with that option. A customisable payment plan allows you to get back on your feet without worrying that you won’t be able to repay the sum in the given period. You choose what’s best for you.

Dealing with a short term loan is easier

Taking a loan isn’t always a burden, especially if you borrow a small amount. Repaying a small loan in a couple of months can be entirely possible for your budget. So, you’ll be able to get out of your financial difficulty, and you won’t have any debts.

Short term loans are a great option to quickly get you back on track- that is of course if you don’t have significant debt. Of course with any loan it is important to take precaution. If you have any questions about short terms loans, read 5 questions to ask when applying for short term loans.

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Fast Loans

Discover The Fastest Ways to Repay Loans

Fastest way to repay loans
Check out these tips on the fastest way to repay loans.

Paying your loans off in small amounts can be easier on the wallet in the short term, but in the long run, you’ll end up spending more and being burdened with debt for longer.

Learn the fastest ways to repay loans below and reap the benefits!

Here are some tips for paying back your loan faster

1. Pay more

If you can afford it, make larger monthly payments to pay off the principal more quickly.

For example, a $2500 fast loan with 6.8 % interest and a 10-year payback period would cost $28.8 a month. Making $70 monthly payments instead of $28.8 enables you to repay the fast loan in just over 36 months.

By paying the principal more quickly, you will also pay less on interest.

2. Make additional payments

The less you owe, the less interest that you will be charged. By budgeting effectively or receiving a bonus from work, you may be able to make additional payments to your fast loan.

3. Create a clear plan

Creating a clear plan is one of the simplest and fastest ways to repay loans.

  1. Start by understanding exactly when your loans will end or if it’s a credit card, then check the current balance.
  2. Next, create a goal to pay it off within a specific period of time. You’ll need to understand exactly how much money to put aside each week to achieve this.
  3. Commit to your plan and you’ll have a clear pathway to becoming debt free ahead.

Make it a routine to pay it off monthly. If you’re facing difficulty in coming up with the monthly payments, create a budget and cut back on your expenses. This way, you can lift your debt obligations off your shoulder faster than ever.

4. Automate savings

Automatically transferring money into alternative accounts is a great way to save extra cash. Rather than spending money on trivial things such as movie tickets or unhealthy meals, automatic payments can help you set aside that extra cash to pay off your debt. 

Make sure you will only use that account to repay your fast loans and other types of debt. This will require sacrifice in certain areas, but it will ensure you are one step closer to financial freedom.

Hide your credit card in a safe place

Don’t be a victim of credit card theft. With easy access to your credit cards via pay pass; strangers who have access to a lost credit card can easily tap on purchases less than $100. Keep your credit card securely in your wallet. If you lend your card to friends or family, make sure you keep track of any transactions online.

Keep your phone in your pocket. 

The same rule applies to your mobile phone. With the rise of Apple Pay, you can purchase your transactions through your mobile phone. Make sure that you keep your phone locked with a passcode so that strangers cannot make any payments without facial recognition or a passcode.

5. Close some credit cards

Having them in your wallet may tempt you to spend more. Leave only the low-interest credit cards for your urgent needs.

6. Consolidate your debts

One of the best ways of ensuring that you continue to pay off your loan quickly is to consolidate your debts into one neat and tidy bundle. This will also protect you against the rising interest rates across different loans. This will benefit you in the long run; whilst making it easier to manage your debts.

7. Be proactive by increasing your income

Earning cash while dealing with your debts is a good way to stay proactive about overcoming debts. You don’t only generate wealth to pay for your loans; you also build your nest egg. If you can put away $100 every month out of your income, that would be $1,200 in annual savings.

At the Australian Lending Centre, we can clear debt management plans to help you move towards a financially secure life. It takes discipline and planning, but you can surely do it.

Warning About Borrowing

Contact Australian Lending Centre to get back on track. 

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Financial Fitness

Saving Money On a Lower Income

saving money on a lower income

There is a range of strategies you can employ to make saving money o. One of the major areas that can save you a lot in the long term is debt consolidation. There are also some other lifestyle choices you can make to improve your financial situation.

Many people think it is all too hard, but everything you do will help, even small changes can make a huge difference. We can all employ a range of measures that will prevent budget blowouts without sacrificing all the things you like doing.

If you are finding yourself on the roller coaster of no savings, bad debt management, poor (or no) budgeting and everything is a bit chaotic, Australian Lending Centre has some tips and tricks to get you out of bad debt employing activities such as debt consolidation, saving and feeling in control again.

First things first – Where Does Your Money Currently Go?

If you don’t yet have a budget, keep a financial diary for your pay period and track how you are spending your money. The Money Smart website offers a great money tracking app to make this easier. This will give you valuable insight into your habits and areas you can save.

  • What are you spending your money on?
  • How much is left over at the end of the pay period?
  • What money needs to go out on payments and bills?
  • Are there any areas of waste or unnecessary spending?
  • Are there areas where you are going backwards and getting into arrears?

Planning and Budgeting  – Where Will Your Money Go?

Once you have a record of what your current spending entails, get online to the Money Smart website and complete the budget tool. Be sure to include all your debts, payments, bills, and income. Mark payments and amounts in your calendar.

Most bank online apps have the ability to schedule payments, so they come out when they are due, but if these are also in your calendar you won’t get any unexpected payments coming out. These regular payments can including things like:

  • Mortgage or rent
  • Car payments, car registration and insurance
  • Household/health insurance
  • Credit card payments
  • Loan repayments
  • Store card payments
  • Afterpay/ZipPay (remember that defaulting on these can effect your credit score)
  • Utilities such as gas and electricity (you may want to discuss bill smoothing with your provider – this is a regular payment over time rather than a massive and shocking bill each quarter)
  • Internet and phone

Bad Debts? Talk to the Credit Provider

The bottom line is that companies want to be paid. They are always receptive if you explain your situation, especially if you have, or are, experiencing financial hardship.

You may be able to negotiate with them to reduce or put a hold on payments until you get back on top of things. Of course, you still have the pay the money back, but a hiatus on payments can help in the short term.

Some credit providers will allow you to reduce the final figure if you can pay the debt outright. If they offer this, it may be time for debt consolidation. If you are too overwhelmed by the phone calls and letters, then talk to us about negotiating on your behalf.

Next Steps – Take Control With Debt Consolidation

When loans and credit cards get beyond what you can cope with in terms of interest and late payments, it might be time to call in help from the experts. Companies like Australian Lending Centre can offer a solution for a bad credit debt consolidation loan.

This is where you negotiate with lenders for a reduced payout figure and then apply for a single loan that will cover all your bills in one payment with a lower interest than general credit cards and late payment fees.

Having one simple debt consolidation loan payment to go out eat pay period is going to be a lot easier than trying to remember everything. The sooner you simplify your payments, the sooner you will be in an easier financial situation.

Money-Saving Tips

Turn off the TV

Are services like Netflix, Foxtel, Stan, Hayu and the iTunes store getting beyond ridiculous? Try cutting out all but the most popular one, to cut back.

Turning off the TV will also help cut back on power and expose you to less spend-inducing ads. You might also have app subscriptions that you don’t need. Although these are small they can add up in a month.

Stop Hoarding and Start Selling

If you have closets full of unwanted clothes, try selling them online. A good clean out also helps you to see what your wearable wardrobe looks like so you can plan your clothes shopping to maximise your shopping budget.

Also if you buy anything make sure it goes with the other items in your wardrobe. Take advantage of sales, why pay retail when most clothes will go on sale towards the middle of the season.

Look for those habits that add up

You can cut back on your habits, such as drinking alcohol during the week, smoking (probably goes without saying but your health and budget will thank you), buying coffees, can all save a surprising amount as well as having general health benefits.

Limiting your drinking to the weekend can save hundreds a month, depending on your drink of choice. That bottle of wine after work at $15 a night can really add up over the week. Similarly, a $4 coffee each day is $20 a week. Make coffee at home in a keep cup and save money and the environment.

Stop using your credit card

By switching to using your debit card or cash for purchases, you will be more aware of your spending habits. It will also prevent the slide into bad credit debt.

Be frugal at the supermarket

Most of the time, buying in bulk or larger sizes are cheaper over time, so check on the prices for the larger sizes. Don’t shop with kids. Pester power is a thing and can increase your spend at the checkout. Never shop when you are hungry. Buy less meat, which is expensive, and opt for more meat-free alternatives, such as tofu, beans, and pulses.

Eat Smarter

With a busy life, planning meals can be a real chore, but while using services like Uber Eats seems like a good alternative, you are actually paying $5 on top of takeaway prices and it really can add up at the end of the pay period. By shopping in bulk, cooking healthy meals and taking the leftovers to work for lunch, you can save quite a lot each day.

Are You Missing Out On Government Payments You Are Entitled To?

Lastly, make sure you check all your entitlements with regards to government payments. As a low-income earner, you may be eligible for some form of financial support if you aren’t already receiving a government benefit.

When every dollar counts it’s worthwhile claiming all you can. To check on payments and entitlements, check out the Department of Human Services. Even a small additional payment may ease your financial burden. Living on a low income is hard, but these payments are designed to help.

Small Changes with Big Returns

Once you have a clearer picture about where your money goes, you make changes to your lifestyle and start on the path to greater financial control, the happier, healthier and less stressed overall you will be.If you need help with debt consolidation, please get in touch. We’d love to hear from you.

Note: This information is general, and doesn’t take into account your specific personal and financial circumstances.

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Debt Consolidation Financial Fitness Financial Planning

Debt Consolidation vs Creating Your Own Repayment Plan

consolidation loans||debt consolidation||debt consolidation loan

Choosing the right financial recovery tool can be quite a headache! What’s the best choice between debt consolidation and creating your own repayment plan? What factors should you consider when making a decision? Read on to find out.

Debt consolidation

If you have multiple credit card balances or debts, you should take out a new loan to pay them off. You can save money or pay your debt sooner by borrowing money at a low-interest rate to pay off high-interest loans or credit cards. Aside from making fewer payments each month, you only have one due date to recall–this lessens the likelihood that you’ll miss payments.

But, if you are not careful when choosing a reasonable debt consolidation loan, you may end up deeper in debt because of high interest rates or hefty fees and penalties. So, before you choose a debt consolidation company, make sure that they are interested in educating you on how to use your debts wisely to achieve financial freedom as much as they are interested in lending money to you.

repayment-plan

DIY debt repayment plan

Do you have a knack for DIYs? Then, think about getting out of debt without asking for external help. If you’re always late on making payments, or if debt seems too much to handle—it’s time to take the reins. But fixing your debt problems without professional help is a bit challenging for 3 reasons:

  1. You’re in this mess because you created it.
  2. You can’t pinch your skin hard enough. When it hurts, you’ll surely let go. The same thing goes for repayment plans. It’s hard to pressure yourself because you may change the rules when they become difficult to follow.
  3. If your debt is too high and your income is low, you may get a new loan to pay off the high-cost debts. That means you’re paying a loan by a new loan while leaving all other debts unpaid.

Here are some useful tips when choosing between debt consolidation and DIY repayment plan:

Reflect on what you did in the past 3 years

It’s so easy to label our “year” as “tight” or “bad” when debts pile up and income lessens. But there might be goals you’ve met and lessons you learned along the way. Make a blunt and honest assessment not just of the things that went “wrong” but your accomplishments as well–small or big, they don’t matter.

What were you hoping to achieve three years ago? Maybe it was a new house or car, a sales goal, or a vacation. List at least five things you planned to achieve and whether they were realised or not. If not, write down two reasons why you didn’t achieve them.

Next, list 2 things you can do to achieve it next time—this time, consolidation and a DIY repayment plan. Focusing on those two main strategies can help you come up with a tangible solution for your debt problems.

change-life

Check your readiness to change your financial life

Maybe you’re set to make some lifestyle changes today because of escalating interest rates, late fees, and frequent calls from creditors and debt collectors. But, what would happen if you only have one creditor to pay each month?

Will you go back to your old borrowing and spending habits? If you make your own debt repayment plan, how determined are you to stick to your goals and resist the urge to adjust them when they’re getting harder to follow?

Ask Yourself

How much money do you have right now? Can you afford to buy what you need and repay your monthly debt? If you’re hard on cash, then it is advisable to get debt consolidation. You will be able to save money on interest, and you have a good chance of reducing your monthly repayments.\

The same thing goes for those who have enough funds but have a poor debt strategy. Debt consolidation helps you pay on time because there’s only one debt to pay.

Contact Australian Lending Centre today to learn more about the most reasonable debt consolidation program and the debt repayment strategy suited to your condition. Apply today or call us now on 1300 138 188.

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News

Factors to Consider before Signing a Debt Agreement

Part 9 Debt Agreement||Debt Agreement||part 9 debt agreement

A debt agreement is a contract that is legally binding between you and the parties concerned – the creditor, debt collection company or third persons involved. Consequently, each party can legally enforce the terms of the agreement against you if you don’t comply with your contract. Learn about the things to keep in mind before signing a contract that can make or break your finances. Always take serious consideration before signing a debt agreement.

The debt agreement process

When entering into a debt settlement, you have to understand that the creditor expects you to be ready to pay your debts. So, prepare to negotiate a certain sum of money or asset to pay for a percentage of your combined debt. Make sure that you can afford to pay it over a limited period of time. In debt settlement, you don’t pay your creditors directly. Instead, you make repayments to the administrator of your debt agreement.

Negotiation takes a little bit of patience and persistence because creditors also know that once they agree to a particular amount, they cannot recover the full amount of debt anymore. Knowing that they cannot get back the full amount you owe, they may give you a hard time during the negotiation process.

Legalities of your debt agreement

A valid contract is an agreement where all the parties agree to it. Meaning, there is mutual consent between you and your creditor. It must state the object of the contract—or the consideration which is typically a sum of money, or asset paid by the debtor to the creditor. The agreement must not allow you to do something illegal in return of debt forgiveness or reduction of penalties. It is also important to be mentally capacitated to enter into an agreement. You must be mentally sound and at least 18 years old to ensure that you are competent enough to enter into a binding agreement.

negotiations

It is important to note that the object of the contract or the “consideration” must be something to be negotiated upon. An agreement is impartial. It gives you the perfect opportunity to discuss and compromise on the terms of the debt agreement before reaching a final contract that is acceptable to you and your creditor. But, take note that there are non-negotiable contracts, but you can still look for ways to ensure that the terms will be satisfactory not only to your creditor, but to you as well.

The agreement must not contain provisions that disagree with the contract laws in your state. You can talk to an attorney to verify the terms of your contract before signing it. Or, you can educate yourself and check whether there are illegal terms in the contract that will jeopardize not only your finances but your reputation as well.

Negotiation points

Write down your objectives for entering into an agreement. What is your desired outcome? Do you want to pay your debts in full while paying for it at a lower rate? Or, do you intend to let go of your assets to finally eliminate your debt? Before you negotiate a contract, have a specific outcome in mind. For example, if you want to extend the loan term, then you should know exactly how long you would like the loan extension to be.

Before beginning negotiations, you should know where you stand. Are you financially capacitated to respect the terms of the contract? Take note of your financial standing and the surrounding circumstances that may prevent you from abiding by your agreement. It is also important to determine your bottom line. Know the highest repayment amount you can make and the lowest one that you think the creditor can accept.

check-options

Check other options

Do you think it’s time to give up and take up bankruptcy instead? If you have no income, and you’re not in any way capable of making even the minimum repayments because of unemployment, and you can’t meet your daily needs, maybe bankruptcy is a better idea. But, it will definitely ruin your credit score, take away your assets—and probably leave you on the streets. The only upside is that your debts will be eliminated.

If you think you can still get a job, improve your business or get any additional source of money to keep up with a minimum payment each month, debt agreement is a better idea.

It is important to note that debt agreement does not refer to debt consolidation. When you consolidate loans you simply roll your existing debts to a new loan; with lesser monthly repayment, lower interest rates and fees and in one easy payment method each month. While debt consolidation companies sometimes negotiate with creditors to lower the repayment each month, there are companies that simply pay off all the loans and charges a new rate to their customers.

Is debt agreement the right solution to your financial situation right now? Talk to us today!

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Debt Consolidation

Is Debt Consolidation better than Bankruptcy?

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When you have a lot of debts with different interest rates, the first thing you will think of is debt consolidation. However, there are certain situations when debt consolidation doesn’t make the cut and other options seem more feasible. Is bankruptcy one of them?

We will compare two financial services—debt consolidation and bankruptcy—and see which one is better for your situation. Note that before you request these types of financial services, you will need to contact an expert to get an idea of what to expect and whether it is a good idea.

Debt Consolidation

Debt consolidation is a great tool you can use to save money and leave your credit rating unaffected. Debt consolidation will transform all your debt payments into one payment. This method’s idea is to lower the monthly payment and interest rate.

You can consolidate your debts through a secured or an unsecured loan. This service requires a certain fee but in the end, you might save more money than before, and you will regain control over your finances.

Here are the pros of Debt Consolidation:

  • Your credit rating and reputation are protected. Your credit score won’t be affected, and you won’t be bankrupt, meaning that your financial status won’t be made public. Bankruptcy records are easy to find and view, and this kind of reputation can affect your future financial endeavours.
  • You can simplify your debts. This means that you will focus on one payment with one interest rate, but you will also get to pay every debt in one go. In other words, you will no longer have to worry about missing a payment or paying it later than usual and suffering the penalties.
  • Unlike other services, debt consolidation will also let you keep your credit cards.

Cons of Debt Consolidation:

While debt consolidation is an excellent method of regaining control over your debts and economy, you could end up paying more in hidden fees and even lose the property. Here are some things to consider:

  • Hidden costs: Many people don’t consider the loan term. When you apply for debt consolidation, you will pay less every month and have a lower interest rate, but the loan term will be increased. If you stay in debt for an extended period, you may end up losing more money in the long run.
  • Losing property: If you default on your loan, you can lose your car or even your house. Depending on the agreement you signed with your lender, you might end up losing a lot more than just money if you default on your consolidation loan.

Bankruptcy

Bankruptcy should only ever be considered as a very last resort. You can eliminate certain debts when filing for bankruptcy. Here are a couple of positive things that bankruptcy brings:

  • When you file for bankruptcy, the creditors cannot harass you or take legal action against you. That means that you also are protected against foreclosures or repossessions.
  • Back to square one: Bankruptcy will eliminate most of your debts, and you can get a fresh start. Depending on your financial situation, you can even keep your car and home and pay them at a reduced rate.

The Negatives of Bankruptcy

Like any other financial service, bankruptcy has negative factors that you need to consider before applying. Here are a couple of things you should check:

  • Credit rating: Your credit rating will be lowered depending on the type of bankruptcy you apply for and your situation. Your credit report will show the bankruptcy for anywhere from seven to ten years. Of course, you may already have bad credit, seeing that you owe a lot of money and are bankrupt because of it.
  • You can have a fresh start once you receive your bankruptcy discharge, but until then, you will have trouble with lenders and other financial institutions.
  • Your reputation: Your employer or people who are associated with you business-wise can easily discover bankruptcy.
  • Financial sacrifices: You will have to sell your possessions if you want to be eligible for bankruptcy.

In the End

So, is debt consolidation better than bankruptcy? It really depends on your situation and what you want to achieve, but yes. Debt consolidation is a financial solution that can have a positive impact on your life, whereas bankruptcy comes with serious drawbacks.

If you want to learn more about the benefits of debt consolidation call us on 1300 138 188 or visit the Australian Lending Centre for expert advice.

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News

Variable-Based Tips On How To Manage Your Debt

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If you’re planning to get a new loan, but you’re not sure if you can repay it on time, here are tips on how to effectively manage your debt, based on 2 financial variables.

Financial success does not depend on the amount of money you have but on specific strategies that apply to your situation. Whether you will use the funds for personal or business purposes-increasing your cash flow is still vital to a successful debt management plan. Debts may increase or decreases depending on your strategy, in the same way as your spending habits influence your cash flow.

You cannot just say that you are going to pay back your debts without some detailed strategy.

The first thing that you can do to manage your debt is to improve the variables that eventually determine your financial capacity to repay. Improving these 3 variables about your debts you will increase cash flow and pay off your debts and improve your finances.

Earnings

How much is your after-tax net income? What about your after-debt repayment income? When computing your free-money, look into your debt to income ratio first.

Your debt income ratio refers to a certain percentage of your monthly gross income that you use to pay debts. It has two classifications: The front-end ratio, or the percentage of income you use to pay for your mortgage, rent, property taxes and other similar housing costs. Second, the back-end ratio, which is the percentage of your income that you pay for all your personal loan and credit card payments and other recurring debt payments, including those covered by the front-end ratio. As long as it is recurring debt, it is still covered by the back-end ratio.

To calculate your debt-to-income ratio, add up all your monthly debt payments. Divide that number by your current monthly income. Get the percentage by multiplying the result by 100. Let’s say if you spend $1000 each month on debt and have a monthly income of $4,000, your debt to income ratio would be 25%.

Increasing your income and at the same time paying your debts can help you lower your debt to income ratio, giving you higher free cash for your other needs. You can also increase your debt payment to quickly pay off your debts until you achieve a zero-debt ratio.

Financial satisfaction

Are you satisfied with your present financial situation? Or, do you find it difficult to meet your monthly payments on your bills?

How much money is enough and well-enough for you? What might be enough to pay all your debts may not be well enough to sustain your lifestyle, pay for your emergency and daily needs and invest for the future. Or, it could be sufficient for you as long as you plan your budget wisely.  Decide how much might be enough for you and your family if you have one to know what number you should definitely try to reach.

Discover more tips on how to manage your debt by talking to our in-house loan experts at Australian Lending Centre today!

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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

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.

Call us today!

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Business Loans Land

Debt Help In The Farming Industry

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Farmers often go into debt to help keep their farms running. Like many other businesses, the farming industry depends on the availability of funds to borrow to get them through tough times and also help them grow when times are good. Just like everyone else, farmers can fall on hard times and have trouble paying their debt. In this case they will have to seek debt help in some form.

Understanding debt obligations and what debt can do for the farming industry is crucial to its business outlook in the medium and long term. An important point to know is how debt and equity differ from each other. Debt has lots of demands that come with it while investor equity is less likely to cause a business financial strain.

When farmers do decide to take on debt it should be used to increase productivity. If the debt payments cannot be made out of profit from the debt then the payments will have to come from other profits. Since profits from farming vary significantly it can make it hard to predict when the payments for debt will come directly. The debt might be investing into something that takes a season or even years to create a return.

It is important to make sure that there will be cash flow to make debt repayments. If a farm was to take on too much debt too early and the cash flow gets tight then it might make it hard to make debt repayments and it could actually ruin the business.

Farmers also need to factor in that the prices for the goods they need fluctuate quite a bit as well. A sharp price increase in something vital for a farm can cause cash flow problems that can put a farmer’s finances in the red.

Debt Help In The Farming Industry

Once anyone is behind on payments it can be hard to get debt help. Not only farmers but any business can struggle to get an outside investor to step in and save their business when their books are out of order. They might have to start selling assets to get their books in order before they can get debt help. A farm is run basically like any other business and the farming industry uses loans to help grow and expand. Knowing how to use debt help responsibly is as important as any other factor in the farming industry.

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News

Credit Card Debt Growing in Australians Aged Between 34 – 54

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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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Interest Rates

First Interest Rate Cut in 7 Years

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Australians have welcomed with open arms the Reserve Bank’s first official drop of interest rates in 7 years. The RBA on September 2nd, dropped its cash rate by 0.25 to 7%, its first cut since December 2001.

While this comes as a certain relief to many families struggling under the pressure of mortgages, many are still cautious. As Prime Minister Rudd announced “Interest rates took a long time to rise and they will take a long time to come back down. And the road will be a very uneven one on the way through.” However many remain optimistic, especially those struggling to make ends meet, and spiralling into debt.

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Refinance and Refinancing

Aussies in Debt

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December 2009 was the largest monthly spend by Australians in history, increasing the average credit card balance to $3,250. The majority of Australians are well aware of the risks involved in leaving credit card debt unpaid. A popular solution to credit card debt is to consolidate your debts into one loan. Aussies in debt is a growing concern, if you are struggling with debt try consolidation.

Over the recent holiday period, Australians demonstrated their confidence that we are coming out of the Global Financial Crisis (GFC) fairly unscathed. This was evident by the December spending peak of $22.02 billion, which was a vast jump of $2 billion from November.

On the average debt of $3,250, credit card spenders making minimum repayments of $100 will take years to repay their balance. However, Australians can save themselves on interest repayments by comparing rates to get the best deal. Another popular credit card debt solution is a consolidation loan. They are perfect for those who need to consolidate multiple credit cards, store card debt and personal loans and can drastically reduce the amount of interest you pay. 

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Refinance and Refinancing

Now is the Time to Refinance

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After the RBA’s decision this week not to increase interest rates at present – home owners should consider refinancing right now.

Refinancing your home loan can allow you to access cheaper interest rates or even unlock the equity in your home to renovate, buy an investment property or consolidate debt.

Some of the advantages of refinancing a loan include:

  • Lower monthly repayments when you refinance
  • The ability to pay off multiple debts through refinancing schemes
  • Reduced risk by changing from a variable rate to a fixed rate when you refinance
  • Access to cash to cover major expenses when you refinance
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Business Consolidation Loans Business Loans

Business Debt Rising

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While there has been signs of business recovery in wake of the GFC, don’t be fooled into thinking that all businesses are out of the woods.

Recent data from the Australian Bankers’ Association, ASIC and the credit brokers show that there’s another wave of bad debts, administrations and insolvencies pending in small business land.

ASIC’s latest data on companies entering external administration for February 2010, was 827 which was higher than 2009 at 796 – with company insolvencies hitting 1159 nationally.

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