Life is filled with unforeseen surprises that may include costly educational expenses, falling ill and covering medical bills, or being involved in an accident and having to pay for repairs. These unexpected expenses can accumulate, and when you try to make various repayments to multiple lenders, it can become chaotic.
It can be very stressful to have multiple debts owed to different lenders. Consequently, you might see yourself sinking deeper and deeper into debt without any solution. This is when debt consolidation can be useful. It’s an effective method to refinance your debts which helps in taking control of your loans and effectively manage them.
What is Debt Consolidation?
If you have multiple loans, you know how difficult it can be to manage them all. With varying interest rates, repayment dates, and amounts, it can be confusing and hard to stay on track. Budgeting becomes almost impossible, and you end up accumulating more debt.
But by consolidating your debt, you can bring all your repayments together and enjoy numerous benefits.
So, in short, Debt consolidation is the process of merging all your debts into a single one. Typically, this is achieved by obtaining a new loan to settle all your existing loans. Consequently, you are left with only one loan to gradually repay.
Benefits of Debt Consolidation
These are just a few of the benefits that come with consolidating your debt
- Budgeting: By consolidating your debts, you can effectively budget your repayments each month. This helps you prioritize your spending and ensures that you never miss a payment, ultimately helping you pay off your loan faster.
- Payment flexibility: Consolidating debt also provides the flexibility to choose your payment frequency. Whether you prefer weekly, fortnightly, or monthly payments, you can tailor them to fit your budget and financial situation.
- Lower interest rate: Consolidating debt offers the advantage of lowering your interest rate. Instead of dealing with multiple debts with varying interest rates, consolidating them into one allows you to secure a lower rate and save money in the long run.
- Credit score: Another benefit of debt consolidation is its positive impact on your credit score. By consistently making your repayments on time, you can improve your creditworthiness and increase your chances of obtaining future loans.
- Loan term: Additionally, when consolidating your debt, you have the opportunity to select the loan term. This means you can set a clear end date for when your loan will be fully paid off, giving you a clear goal to work towards.
Things to consider before refinancing!
Here are a few things to consider before paying a company to reconsolidate your debts.
- Get in touch with a mortgage provider: If you’re having trouble paying your mortgage, reach out to your mortgage provider as soon as possible. They may assist you during this difficult time by discussing potential options such as changing your loan term or temporarily reducing or pausing your repayments.
- Switch to home loans: Consider switching to a different home loan that offers better terms, including lower interest rates and fees. However, make sure to thoroughly evaluate the new loan to ensure it truly is a better deal. Look at the options available for switching home loans.
- Have a word with your credit providers: If you have credit card debt or other loans, contact your credit provider to discuss the possibility of changing your repayment terms or extending your loan.
- Think about a credit card balance transfer: A balance transfer can be a useful strategy to manage your debts more effectively. However, it’s important to be cautious as it can also lead to additional problems. Refer to the information on credit card balance transfers to make an informed decision.
Being exhausted by expensive interest rates on your existing loans? It’s time to refinance your debts with Divitis Finance! Our team of specialists guarantees you a diverse range of loan choices & lower payments.
Get in touch with us today and don’t let financial stress hold you back any longer.