Wealth Connexion outlines what you need to know about debt consolidation, and how financial advisors in Brisbane can help.
Being in debt can be stressful – especially when you are paying off multiple debts simultaneously. With various debt payments ongoing, it can be hard to keep track of your deadlines and different interest rates. If you are struggling with staying up-to-date with your repayments, you could consider debt consolidation as a possible solution. As financial advisors in Brisbane, we outline everything you need to know if you are considering debt consolidation for your finances.
What is debt consolidation?
Simply put – debt consolidation involves taking out one new loan in order to pay off multiple existing debts. This allows you to combine credit card bills, loans, and other debts into a single monthly payment. The overall goal of doing this is to simplify and lower your monthly payments, which can make it easier to manage your finances and pay off your debts faster.
The general benefits that debt consolidation can provide include:
- A lower interest rate – Your new loan may have a lower interest rate than, for example, a high-interest credit card debt.
- Single payment – You only pay one monthly payment, simplifying the payment process.
- Lower monthly payment – By extending the repayment timeline, you could lower your monthly payment though the total debt is still the same.
- Improved credit score – Paying off debts can help to improve your credit score.
Why consider debt consolidation for your finances?
You can consider debt consolidation to help you get out of debt faster by lowering your interest rates and consolidating your payments.
Consolidating high-interest debts into one lower interest loan can reduce the total interest you pay, which can be an appealing incentive. Furthermore, having just one payment each month can be easier to manage than keeping track of multiple payments, helping you to avoid missing payments or having to pay late fees.
Am I a good candidate for debt consolidation?
As with any endeavour with your finances, you should do thorough research (and ask for input from a financial advisor in Brisbane) before jumping in with debt consolidation. In general, debt consolidation tends to work best for individuals that meet the following criteria:
- Good credit score – Having good credit will help you to qualify for a consolidation loan. A better credit score also generally means you are more likely to receive a lower interest rate.
- Ability to afford payments – Lenders will want to see evidence that you have enough income to make the monthly payment.
- High interest debt – If you are struggling with high-interest debt, consolidation can drastically reduce interest costs.
How to apply for debt consolidation
For your own financial safety, it can be helpful to check that your chosen debt consolidation company is licenced on the ASIC’s website. Furthermore, if you think that you’re a good candidate for debt consolidation, it’s time to speak to your financial advisor.
Your advisor can help you to calculate the total costs over the loan term, and thoroughly review all terms and conditions before you accept an offer. Don’t feel pressured to accept the first offer!
If you need assistance with debt consolidation, contact Wealth Connexion today! We are expert financial advisors in Brisbane ready to help you get the most out of your finances.