Are you thinking about using debt consolidation loans to pay off your debt? When facing financial hardship, it's hard to see a way out. However, consolidating your debts into a single repayment might save you money.
Read our loan guide to determine whether debt consolidation is the right choice.
Let's get to the following commonly asked questions:
Whether you bought a new car or signed up for a home loan, debt can quickly lead to high credit rates and burdensome monthly fees. Sometimes debt is inevitable. However, how you handle your existing debt can make all the difference.
Debt consolidation can help you get out of huge debts. This unsecured personal loan to pay off debt can help you streamline your loan products into a more manageable monthly repayment.
Note: Use a repayment calculator to determine if a consolidated loan could save you money.
Debt consolidation is a personal loan for debt repayments. With one loan, you can pay off multiple debts. This option is easier for many people struggling to manage several payments leaving their bank account at different times.
Debt consolidation loans are often unsecured loans. You can use them to pay back any type of debt, including car loans, credit card debt, and student loans. Find out whether it's a good option for you with a personal loan repayment calculator.
Some lenders offer loans to help you pay off other debts. Debt consolidation can help you meet your minimum loan repayment fees. However, you might find that the total loan cost is more significant than separated debt repayments.
Facing several debts can cause money anxiety. Lenders review your financial situation before offering a loan and personalised rate. If you have several other debts — particularly if you have missed several repayments — they might reject your application.
Alternatively, lenders might offer higher personal loan rates and extra fees and charges. However, lenders could also offer debt consolidation loans with competitive loan rates.
Important: If several online loan applications get rejected, it will harm your credit score.
There are several other ways to get out of debt and streamline your repayment options, such as:
Note: Fixed rates aren't always cheaper than a variable rate but will help you manage fortnightly or monthly payments.
In 2021, the average personal debt was $46,000 in Australia. While this number might seem intimidating, not all debt is bad credit. For instance, most people cannot buy a house without a mortgage.
If you need to apply for a new loan, ensure it won't adversely affect you.
Note: If you struggle to pay loans by the due dates, set up automatic payments with online banking.
Here are some benefits to consider:
Note: Mortgage and debt consolidation loans tend to have lower rate ranges.
Taking on new debt is a big deal. Here are some potential drawbacks:
Find out if you can afford to consolidate your debts with a loans repayments calculator. You might need to consider a debt agreement if you cannot repay your loan credit.
Important: Some lenders won't let you consolidate debt with a loan unless you have excellent credit scoring.
Debt consolidation loans might make your loan repayments more manageable. With just one repayment each month, you'll find it easier to keep track of your repayments and reduce the chances of missing a payment.
If you enjoy using our app, please take a moment to rate it in the App Store. Your feedback in the past has tremendously helped us at WeMoney to improve the app to help it be the best that it can be. A massive thanks to each one of you for making that happen!
Disclaimer: The author is not a financial advisor and the information provided is general in nature and was prepared for information purposes only. This article should not be considered to constitute financial advice. Accordingly, reliance should not be placed on this article as the basis for making an investment, financial or other decision. This information does not take into account your investment objectives, particular needs, or financial situation.