If you have a lot of debt, then you are certainly under a lot of stress. Indeed, it is stressful to make calculations till the middle of the night and restrict your spending to the possible minimum.
Sometimes, just seeing all the bills in your mail box can make you go crazy. Even if you are able to handle your debt, it may have an adverse effect on your debt-to-income ratio and lower your chances for qualifying for a home loan or another major loan.
No matter what your situation is, a debt consolidation loan can be the solution that you need. The lenders offering debt consolidation loans repay your entire existing debt, which corresponds to the principal amount on the new loan. You are charged interest on the new loan and have to make just a single monthly payment. Usually, the interest rates on consolidation loans in SA are lower than those on personal loans and credit cards so you can get to save money.
The main drawback of debt consolidation loans is that they give consumers blank cheque to start using their credit cards for spending, which can be uncontrollable, once again. When they see the zero balance on their cards, many of them rush to enjoy the financial "freedom" which it gives them and they soon end up in debt again. This debt may be much greater than the previous one incurred. The most important thing is NOT to use your credit cards for reckless spending once again. Otherwise, the debt consolidation loan will just be a temporary relief that can get you into even more trouble later on.
As long as you can avoid this temptation, you should certainly go for debt consolidation. Use a few tips on comparing the different companies offering such loans:
- Use the services of a reputable company with long-term and experience and a large client base. As long as they have a large number of positive reviews, they can certainly be trusted.
- Check the ratings of different companies with the major consumer organizations.
- The company which you choose should provide a complete set of educational materials and tools on debt consolidation on their website.
- Compare the interest rates, fees, monthly payments and penalties of different debt consolidation loans to make the right choice. Take extra care and pay attention to the details.
Debt consolidation loans are a super effective way for repaying debt and for improving your credit record, provided that they are used smartly. The most important thing is to avoid using your credit cards extensively after you have repaid your outstanding balances. Additionally, you must read carefully all loan documents before sealing the deal with the lender.