Many people believe a debt consolidation loan will solve their debtor problems
Before you consider a debt consolidation loan you should undertake an independent financial assessment. You need to be confident that you can afford the debt consolidation loan repayments. If you cannot afford the debt consolidation loan repayments and you subsequently default on the loan, you may lose the opportunity to explore other options which may be available to you today. For example, if you apply for a debt consolidation loan now and you default on the loan within the first 6 months of the debt consolidation loan, your creditors may not accept any other alternative methods for the debt to be repaid or settled.
When is a debt consolidation loan right for me?
If you have sufficient free cash flow after allowance is made for your essential living costs (like food, rent and other living expenses) then you may be able to “bundle together” your debts and consolidate them into a single loan. Bundling your debts into a single loan is called debt consolidation.
What are the advantages of debt consolidation?
The advantages are that you may be able to reduce the total amount of interest paid on your debts. Typically the rate of interest for a debt consolidation loan may be less than the rate of interest on your credit cards. For a debt consolidation loan to be effective you must check that the rate of interest on the debt consolidation loan is less than what you are currently paying.
Cut up you credit cards!
If you have applied for a debt consolidation loan and have “bundled” your credit card debts into a debt consolidation loan, then you should cut up your credit cards and apply for a debit card. With a debit card you will only be able to spend the credit you have available on your debit card.
