What is debt consolidation?
Imagine for a moment, that you’re trying to juggle four balls in the air. Then imagine trying to juggle just one ball. Much easier, right?
That’s exactly the goal behind getting a debt consolidation loan.
Debt consolidation is a very effective, and popular, method of getting debt under control. Because of its popularity, you may well have heard people talking about it.
We’re here to add to those conversations, and in this blog we explain in basic terms, what debt consolidation is.
Do you have several different loans?
If you’re in the situation that you owe money on numerous different loans – whether it’s car payments, hire purchases, credit cards or other loans you’ve taken out – you may find it difficult to remember due dates on various debts, sometimes resulting in late payments. This can not only lead to steep charges; it can also affect your credit score in the long term.
There is a better, and less stressful way.
Roll several debts into one
If you’re a New Zealander currently managing several sources of debt at the same time, there are easier ways to cope with the numerous payments that you need to deal with on a monthly basis.
A simple way of thinking about debt consolidation is that instead of juggling many debts at the same time, you only have to keep your eye on one. Rather than having many different debts to pay off separately, a debt consolidation loan allows you to merge multiple debts into one loan from one provider.
By focusing on one monthly payment, your debt becomes a lot more manageable, and a lot less stressful.
Achieve your financial goals, and simplify your life
What’s your priority when it comes to your debts? Some people want to pay less in the long run, some don’t want to spend so much of their monthly income on repayments, others are simply focused on having fewer repayments to keep track of.
Debt consolidation loans can often help you achieve these goals, by:
- Paying ess in total interest and fees; or
- Spreading repayments over a longer term to allow lower monthly repayments; or
- Simplifying those debts into a single fixed monthly payment.
Learn how you can easily consolidate your loans
By re-designing your approach to debt around one simple monthly repayment, debt consolidation loans are designed to reduce the amount of time you spend worrying about your debt – and give you confidence that you’re making a positive step towards managing your money wisely.