Consolidating debt: where to start
When you decide a debt consolidation loan is the way forward, start by calculating your overall financial liability, then determine your credit score, and finally, find a lender with interest rates that work for you – and a great reputation for customer service.
If you’re one of the more than 13 million Australians1 who have a credit card, or you’ve just got other debts to deal with, balancing it all can be overwhelming. Things get especially complicated when you have multiple repayment dates, amounts and interest rates. For people who want to simplify their finances, a debt consolidation loan can be a great solution.
What is a debt consolidation loan?
A debt consolidation loan allows you to combine multiple debts into a single loan with one repayment date and amount, and a lot more simplicity. Whether you have existing personal loans, car loans, credit cards, or something else, a debt consolidation loan can combine them into one repayment to make your financial situation less of a hassle.
Where do I start? When considering a debt consolidation loan, you want to start by figuing out exactly what debt you have, then decide your next course of action. 1.Assess Your Debt Situation
- Assess Your Debt Situation
Start by listing all debts you have, and note the outstanding amounts, repayment amounts and interest rates on each. Combine these figures to determine your overall financial liability. - Lay out your budget
First, calculate the basics like your monthly income and expenses. From there, decide how much you can afford for your monthly repayment. - Determine your credit score
Your credit score will have a big impact on your approval, and the rate you could be approved for. Check your report for any errors, as these could hurt your score and approval odds.
Choosing a lender
When you’ve decided a debt consolidation loan is the way forward, you’ll want to ensure you’re working with a lender you can trust. To get started, do some research to get acquainted with your options. When it comes to your finances, you want to be sure you’re partnering with a lender you can trust.
Key factors to consider include:
- The interest rates and loans amounts the lender offers
- The loan terms and conditions
- The fees and extra costs associated with that lender
- The lender’s reputation for customer service
Wrapping up
Debt consolidation loans can be a lifeline for Australians struggling to manage multiple debts. If you’re ready to start consolidating, begin by assessing your debt situation, understanding the mechanics of debt consolidation loans, and working with a reliable lender. From there, you can take the first step towards simplifying your finances.