Categories
Debt Consolidation

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

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.

Categories
Debt Management Tips

5 Common Debt Management Mistakes and How to Avoid Them

Managing debt is a critical aspect of financial well-being, yet many people find themselves stuck in a cycle of debt due to common mistakes.

If you’re looking to regain control of your finances, avoiding these frequent pitfalls is essential. 

Let’s explore five common debt management mistakes and how you can sidestep them to achieve financial stability.

5 Common Debt Management Mistakes and How to Avoid Them

1. Paying Only the Minimum Payment

One of the most common mistakes people make is paying only the minimum amount due on their debts, particularly credit cards.

While this may seem like an easy way to manage monthly expenses, it often leads to prolonged debt and a significant increase in interest paid over time.

How to Avoid It: Make it a priority to pay more than the minimum payment whenever possible.

Even an extra $50 per month can significantly reduce the overall cost of your debt. Consider creating a repayment plan that focuses on paying off high-interest debts first to save on interest charges.

Paying Only the Minimum Payment

2. Ignoring the Total Cost of Debt

Many people focus solely on monthly payments and overlook the total cost of their debt, including interest rates and fees.

This tunnel vision can lead to a false sense of financial security and make it difficult to recognise the long-term implications of your debt.

How to Avoid It: Always consider the total cost of your debt before making financial decisions.

Use a loan calculator to understand how much you’ll pay in interest over time and explore options for reducing that cost, such as refinancing or consolidating high-interest debts.

3. Taking on More Debt to Pay Off Debt

Taking on new debt to pay off existing debt—whether through loans, balance transfers, or credit cards—can create a vicious cycle if not managed carefully.

This strategy might offer temporary relief, but it often leads to even more debt if you don’t address the root cause of your financial issues.

How to Avoid It: Before consolidating or transferring debt, develop a realistic plan to pay it off.

Ensure that the new debt offers better terms, such as a lower interest rate, and commit to not accumulating additional debt while paying off the existing balance.

Focus on living within your means and budgeting effectively to avoid falling back into debt.

4. Failing to Prioritise Debt Repayments

When managing multiple debts, it can be easy to lose track of which payments should be prioritised.

Without a clear repayment strategy, you may end up making minimal progress on all your debts or even missing payments.

How to Avoid It: To avoid common debt management mistakes, adopt a structured repayment plan, such as the debt snowball or debt avalanche method.

The debt snowball method involves paying off your smallest debt first, which can provide a psychological boost as you eliminate each debt.

On the other hand, the debt avalanche method prioritize debts with the highest interest rates, helping you save money over time.

Choose the method that best fits your financial situation, and stick to it consistently to avoid falling into debt management traps.

5. Not Seeking Professional Help When Needed

Many people struggle with debt management alone, feeling too embarrassed or overwhelmed to seek professional advice.

This can lead to missed opportunities for better financial solutions, such as debt consolidation, negotiation with creditors, or even debt relief programs.

How to Avoid It: If you’re feeling overwhelmed by your debt management mistakes, don’t hesitate to seek professional help.

Financial advisers, debt counsellors, and other professionals can offer valuable insights and guidance tailored to your specific situation.

Many organisations offer free or low-cost services to help you create a manageable plan and get back on track.

Managing debt requires a proactive and informed approach.

By avoiding these common mistakes—such as paying only the minimum, ignoring the total cost of debt, taking on more debt, failing to prioritise payments, and not seeking help when needed—you can create a solid foundation for financial freedom.

Remember, the key to effective debt management is having a clear plan, staying disciplined, and making informed decisions. Take control of your finances today and set yourself on the path to a debt-free future.

If you find yourself struggling to control your debts, a certified specialist at Australian Lending Centre could provide Debt Management.

Our proven system has helped thousands of Australians to turn their finances around.

Not Seeking Professional Help When Needed

Categories
medical loans Tips

How to Pay Medical Bills When You’re in Debt – 6 Solutions

It’s costly to be sick, and patients in debt are particularly vulnerable. Despite the government’s efforts to promote healthy workers, healthy eating, and active living, illnesses still arise, and more often than not, people aren’t financially ready for them.

This blog explains how you can afford to pay medical bills when you’re in debt. We also discuss how different types of employment can impact your circumstances when you become ill.

How Employment Impacts Your Ability to Pay Medical Bills

Casual Employees

Would you rather go to work while sick or risk being unpaid and potentially losing your job? Many casual employees face this dilemma, often dragging themselves to work despite their illness because they can’t afford to call in sick.

Without sick pay benefits, casual or contract workers might be forced to ignore their doctor’s advice and report to work. It’s not uncommon to hear of individuals suffering through injuries or illnesses just to secure their wages.

How Employment Impacts Your Ability to Pay Medical Bills

Salaried Employees

Although Australian law requires employers to provide their employees with sick leave benefits, the allotted days may not always be sufficient for a full recovery.

As a result, some employees feel pressured to return to work prematurely after exhausting their statutory sick leave, which can compromise their health and lead to more time off in the future.

Some people don’t even apply for sick leave if they know their company is restructuring, cutting costs, and firing employees.

Self-Employed

The concept of “sick pay” doesn’t exist for self-employed individuals. Falling ill can be catastrophic if your business relies on your physical presence to generate income.

The absence of a safety net makes it crucial for self-employed people to carefully manage their health and finances.

Does it Help to Have Health Insurance?

While Medicare provides access to free hospital treatment and subsidises out-of-hospital medical care, you may still face out-of-pocket expenses if you need elective surgery.

Paying for private health insurance from companies such as Medibank, Australian Unity, HCF, and HBF can be helpful in the long run. However, private health insurance comes with excess fees. Additionally, not all insurance plans cover every incident, so it’s important to thoroughly read the fine print before committing to a policy.

The most common health insurance coverages include Lifetime Health Coverage, the Medicare Levy Surcharge, and the Private Health Insurance Rebate. Despite these options, there are occasions when insurance coverage falls short, leaving you with additional costs.

6 Solutions to Pay Medical Bills When You’re in Debt

Medical bills can be overwhelming, especially if you’re already struggling with debt. Here are 6 strategies to help you manage and pay off medical bills without worsening your financial situation.

1. Negotiate with Healthcare Providers

  • Keep an Eye Out for promotions: Sign-up deals for customers for new customers are always being offered. Check out the latest promos here.
  • Ask for Discounts: Many healthcare providers offer discounts for uninsured patients or those facing financial hardship. Don’t hesitate to ask for a reduction in your bill.
  • Set Up a Payment Plan: Arrange a manageable payment plan with your healthcare provider. This can spread the cost over several months, making it easier to handle.
  • Request Itemised Bills: Ensure all charges are accurate by asking for an itemised bill. Sometimes, errors or unnecessary charges can be identified and removed.
Negotiate with Healthcare Providers

2. Negotiate employment terms before signing a contract

  • Highlight Any Pre-Existing Health Issues: Disclose any pre-existing health conditions when negotiating employment terms. This can help ensure you receive the necessary support and accommodations. It can also be a crucial factor when considering health insurance options provided by the employer.
  • Plan carefully if you are Casual or Self-Employed: Without the safety net of sick leave or employer-provided health insurance, it’s vital to take the extra steps to plan for potential health issues. Consider purchasing individual health insurance, setting aside emergency funds, and exploring income protection insurance to safeguard against periods when you might be unable to work due to illness.

3. Explore Financial Assistance Programs

5. Consider Medical Credit Cards or Loans

  • Medical Credit Cards: Some providers offer credit cards specifically for medical expenses. These often come with interest-free periods for as long as 18 months. But be cautious of high interest rates if you can’t pay off the balance in time.
  • Personal Loans: If your credit is good, you might qualify for a personal loan with a lower interest rate than your current debt. Use this loan to pay off medical bills and consolidate existing debt.

6. Crowdfunding

7. Debt Consolidation

  • Consolidate Debt: Consider a debt consolidation loan if you have multiple debts, including medical bills. This combines all your debts into a single loan with one monthly payment, potentially at a lower interest rate.
Your Solution to pay medical bills when you're in debt

Your Solution

Medical bills are often out of our control, so being in debt at the same time can feel crippling. With the 6 tips above, we hope to have given some insight into some solutions to pay medical bills when you’re in debt.

Whether you take advantage of health insurance promos, get a medical loan or benefit from crowdfunding, there are options out there. You just have to know where to look.

If you would like to receive help in the form of a medical loan, complete an online application with Australian Lending Centre here.

Categories
Short Term Loans

5 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.

Categories
Fast Loans

Discover The Fastest Ways 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.

Contact Australian Lending Centre to get back on track. 

Categories
News

Factors to Consider before Signing a 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!

Categories
News

Variable-Based Tips On How To Manage Your Debt

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!

Categories
Debt Consolidation

When Is a Debt Consolidation Loan Feasible?

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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Categories
Debt Consolidation

Are You Falling for these Debt Consolidation Traps?

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!

Categories
Financial Planning

Making Sense of Australia’s Comprehensive Credit Reporting

Understanding Bad Credit with Australia’s new Comprehensive Credit Reporting

Australia’s new comprehensive credit reporting system came into effect from March 12 this year and has changed the manner in which some lenders look at risks when accepting new clients.

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Financial Planning

How Can Financial Distress Impact Your Health

The stress caused by the economic downturns and financial shortcomings can literally make you sick. This is quite logical. In the recent global economic downturn, many evidences were recorded linking financial distress to various health conditions. That link is not surprising.

In 2005, a research was conducted in the US to identify possible health implications of financial distress. That study explored specific health effects that are often and logically associated with financial problems. It surveyed random individuals from across the country.

The results showed that there are various perceived possible effects of financial stress on both physical and mental health. Financial problems and poor health are associated. Stress is the main health impact of job loss, piling debts, loan defaults, and budget shortages. From there, many other health conditions can possibly ensue.

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Financial Planning

How to Financially Deal with a Job Loss

With the previous spates of job layoffs amid the economic crisis, everyone logically feels nervous about possibly getting in debt and running out of cash. These are interesting times and all of us should focus just on the positive. Stay productive and resourceful especially when dealing with your finances.

Job loss could be inevitable. No one could be spared once the financial crisis bites on companies. That is why you should be prepared for the unexpected. It is important to know how to cope with a possible crisis. You could cope with the loss of your income if you would observe the following tips.

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Tips

Christmas Shopping – Common Spending Habits

Christmas is undoubtedly a season for shopping. The spirit of the occasion is indeed in gift-giving. You may have to shop for all the presents you intend to give away. At the same time, you may want to shop for yourself and for your household.

It is not surprising that many consumers tend to overspend during Christmas shopping. That is because malls and retailers are doing their best to entice you to spend. Your shopping mood could be set on fire by the festive decorations. The special markdown sales and new items on the display could further persuade you to buy until you drop.

Are you ready to once again hear the cash register ring for your Christmas shopping? There are many tips you should first look at and observe. Here is a simple and practical list of the do’s and the don’ts when shopping for the season.

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Financial Planning

Calculating your Net Worth

Your net worth could be an effective indicator of your financial condition. It could measure your annual progress financially. In general, the net worth is the overall sum of all your current assets or properties minus the sum of all your liabilities. This way, you could instantly and clearly see if your assets are still bigger compared to your liabilities, which is the ideal scenario.

Calculate your net worth to determine your current personal financial performance. Do not worry if you think you would obtain a negative figure. Instead, be positive about it and set effective goals to emerge out from the situation. It would surely be helpful and more advantageous if you knew your present financial condition. Furthermore, computing net worth is not as difficult as you think it is.

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Financial Planning

Australian Borrowers Cautioned to Curb Spending

Borrowers have been urged to stem their spending over the approaching festive season, as the world financial markets remain unstable. As the end of the year starts to approach, the Christmas holiday period is a common time to splurge on those gifts and leisure activities, without as much concern about the bank balance. This is one of the most common times to accumulate debts.

However the head of Consumer Advocacy at a mortgage corporation Lisa Montgomery, warns it is “an area of spending which traditionally tends to blow out over the last few months of the year and invariably leads to a New Year hangover.”

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Financial Planning

The Cost of Raising a Child is now $1 Million

The cost of raising children to 18 has hit the million dollar mark research suggests.  In comparison to the days where children where entertained more simply, parents are now finding themselves forking out for expensive toys, the latest technologies and private lessons for dance, sport, music and schooling.

Considering the average child now stays at home until the age of about 24 the real cost to the Australian parent of raising children is said to be roughly $1,028,093.

Generation Z, (those born from 1995), are the most financially endowed generation of children ever.  Every child has their own set of everything. They are definitely not in the era of shared toys or hand-me-downs.

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Refinance and Refinancing

Sub-Prime Crisis Heralds New Age of Debt

The Sub-Prime crisis is sending the international property market into recession, with property values falling significantly. However surprisingly, the Australian property market continues to rise. How long until Australia follows suit?

Australian property prices compared with income levels are the highest in the world. Our endless mortgage repayments continue, reflecting this dire need to fulfil the Great Australian Dream of owning our own property. Although as interest rates continue to rapidly ascend, we may be heading towards a crash.

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News

Celebrity Lifestyles Create Debt for Young Australians

Many Australians, especially the younger generations are obsessed with celebrity image, and pressure to keep up with the ever-changing style of the stars is driving an annual $8.7 billion credit card spending spree. The modern day cult of celebrity is now so pervasive that young men and women alike are racking up expensive credit card debts to copy the looks and lifestyles of the rich and famous. Matching celebrity lifestyles is creating debt for young Australians at an astounding rate!

A recent study conducted on the rise of celebrity culture in Australia, reveals that almost 90% of young Aussie woman feel that they are expected to match the idealised images and designer wardrobes of the celebrities. This isn’t really surprising when you consider that celebrities are found on every source of media, not to mention they can be intimately followed by the likes of reality television series and social networking sites such as Facebook and Twitter.

The biggest culprit of this obsession is women aged 18-34 years. Two in three women admit to using their credit cards to purchase items to mimic celebrity style. This dangerous fascination is leading to many Aussies maxing out their credit cards by spending thousands of dollars a year on clothes, accessories, hairstyles and beauty treatments popularised by the stars.

However it’s not only the women, nearly half of Aussie blokes aged 18-34 years admit to being influenced by the style of Hollywood’s leading men. Aussie men have also admitted to purchasing clothes, beauty products and even sports cars to emulate a celebrity lifestyle.

Celebrity Endorsed Debt for Young Australians

Both men and women are likely to buy the never-ending ranges of celebrity endorsed products, whether it is a celebrity promoting a company’s product or the product itself is owned by a celebrity. Just look at all of the celebrity fragrances on the market as one example.

Many young Aussies are none the wiser of the repercussions their spending habits could have on their future. Not only are they setting themselves up for years of debt and interest repayments, they are also potentially facing bankruptcy. Bankruptcy is the worst financial result to any individual’s life. By filing for bankruptcy you have instantly put yourself in a position of uncertainty, as it can negatively affect so much of your financial freedom.

Limitations of bankruptcy

If you are bankrupt, you cannot hold certain licenses, there are restrictions on employment, and you may be required to pay part of your income to a Trustee. You also must obtain the Trustee’s permission to travel overseas, some of your divisible property may be sold and any divisible property you acquire during bankruptcy, vests in your Trustee. Also when you are bankrupt you are limited to obtaining loans and credit.

Manage your debt

It is important to get a hold of your finances before they become too difficult to manage. Many young Aussie is excited by their ability to use their first credit card, and they can easily forget that every payment needs to be repaid, and due to interest you usually end up paying more for the item as a result of placing it on your credit card. Credit cards should be used as a tool for purchases such as airfares and for emergencies. You should intend to make the repayments in full as soon as possible to avoid accruing interest charges. If you find that you need to make everyday purchases such as groceries or petrol on your credit card because you lack the funds to purchase these items from your income, then you could be heading for a trouble-filled financial future.

If you are finding it difficult to make your debt repayments on credit cards or personal loans then you should speak with one of our experienced debt consultants today.