Wednesday, 29 July 2015

Debt Consolidation

#DebtConsolidation when does it make sense to consolidate your debt?

Might seem like a simple question but its not at all. Consolidation simply means to add together to manage more effectively. Debt consolidation means to add all your debt into a single loan.
The purpose of this is mainly to save on interest and to make repayment more manageable.
You have 2 loans of R10 000 each with interest rates of between 30% and 60% per year.
You also have a credit card of R30 000 at a rate of 17% each of these credit facilities are paid over different terms. Some over 24 months others over 60 months.
Now, to consolidate you would need another loan of R50 000 to settle all the other loans and then you simply have one loan to pay right?

Wrong! Its very important that you look at the interest you will be charged on this new loan and the term over which it must be paid.
If the loan is simply another un secured loan the interest rate would probably not be much different to what you are paying on your credit card.
Un secured loans are loans not secured by assets. So the bank has no claim over anything you own if you don't pay.
Secured loans on the other hand are secures against an item like a property. A home loan is an example of a secured loan.

The only way to effectively consolidate debt is with a home loan.
If anyone one else tells you you can consolidate debt with an unsecured loan the have no clue what they are talking about.
Home loan interest rates are the lowest loan rates you will find. If you too a home loan to settle your short term debt and paid it off over 5 years you would be making a fantastic financial decision.

The problem with consolidation loans are that by the time people think of consolidation they have already missed a few payments and then no credit provider would be willing to assist them.

In short, debt consolidation is only available to home owners that makes this decision BEFORE they run into trouble.

#MoneyMatters #Debt #DebtFreeIn90Days #ResetYourDebt #MeechamPrinsloo #DebtConsolidation #DebtSpecialist

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Personal Debt and Insolvency Practitioners

We are not debt counsellors and we do not offer debt counselling as a solution.

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