All That You Need to Know About Debt Consolidation Loans

Going by the statistics of May 2021, Australia has some of the highest levels of personal debt on this planet. In fact, as per the RBA data, the total amount of the personal debt lying outstanding in Australia as of September 2020 was to the tune of $155 billion. Well, as long as you can manage to keep your debt at a manageable level that's all right. You can very well meet your personal objective with the help of that loan. But what if you have multiple roles and they go beyond a manageable level? That's when the concept of debt consolidation comes into play.

If you are paying for car repayments, personal credit cards, personal loans, or a combination of personal debts, there is a high chance that you will end up paying more interest and associated charges that you would never like to. This is where a debt consolidation loan will come in handy. Instead of having to make all these repayments individually on a weekly, monthly or a fortnightly basis, a low interest debt consolidation & refinancing loan will combine all these unpaid debt into a single unsecured personal loan with a nominal rate of interest.

Fundamentally speaking, a bank or an altogether separate financier will pay the entire consolidated amount of all the liabilities originating from all the sources, so that you just have a single debt to deal with and pay back. This will not only simplify your debt management, but will also help you to reduce the total amount of interest, thereby letting you repay the entire debt much sooner than later.

When it comes to choosing a debt consolidation loan, there are two types to choose from – a traditional debt consolidation and balance transfer credit card.

The first option involves either taking an entirely new personal loan, or extending the available credit from the existing debt just like a mortgage for combining and paying off all the debts for a full and final settlement. This is typical debt consolidation for current loans that will make your debt management easier.

When you avail the second option – a credit card balance transfer, all the existing debts that you have are transferred into a new credit card, with a very low or even zero perfect rate of interest. However, there is a catch. All these reduced rates of interest will be available for a limited period.

This particular loan is typically taken by those having multiple types of debts from various sources with variable rates of interest and repayment schedules.

It is essential to note that repayment of debt consolidation loans is much easier and cheaper than payment of multiple debts having variable rates of interest. Thus, taking low interest debt consolidation loans makes finance budgeting much easier almost instantly, as the debtors have only a single repayment to manage. With only one debt to manage, the account keeping fees, overall ancillary payments will drastically come down and this will reduce the interest further.

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