Are your debts getting out of control? Are you unable to manage your multiple debts? If your debt is giving you sleepless nights, it is important to seek help quickly. Remember, ignoring your debts won’t make them go away. It will only make things worse.
If you are in debt, here is a list of questions you should ask yourself:
Are you finding it difficult to meet your monthly repayments?
Consider rolling all your multiple debts into one monthly repayment. It will:
>> Reduce the amount you pay each month; and
>> Make your debts easier to manage.
Do you have multiple debts (i.e. mortgage loan, credit cards and store cards)? Are you having trouble managing these multiple debts?
Multiple debts means:
>> Paying multiple sets of interest; and
>> Finding it hard to stay on top of your multiple debts.
So, consider consolidating your debt because it will:
>> Enable you to keep track of your debts; and
>> Enable you to pay down your multiple debts.
Do you have negative listings and defaults listed in your credit file?
If you do have a bad credit history, you will find that your loan options may be limited.
Do your multiple debts have high interest rates?
Consolidating your debt should enable you to get a loan with a lower interest rate.
Do you have equity in your home?
If you do have equity in your home, you may be able to use it to pay down all your multiple debts.
When is it the best time to consolidate your multiple debts?
You can consolidate your multiple debts:
>> Whenever you consider you are ready; and
>> When you are unable to manage your multiple debts anymore.
Before you Borrow
If you are thinking of borrowing money, here is a list of steps you should consider and which may help you:
Use a budget planner to work out what you are spending now.
Use a borrowing power calculator to calculate:
>> How much you can afford to borrow; and
>> If you can afford the repayments.
If you decide to borrow, shop around for the best deal and take time to compare:
>> Interest rates;
>> Product features on offer; and
>> Fees and charges.
Know who you are dealing with. This means anyone engaging in credit activities (e.g. anyone providing credit or providing credit assistance to you) must give you:
>> A copy of the “Credit Guide”; and
>> A “Credit Proposal Disclosure Document “(CPDD), with the required information listed such as their Australian Credit license (ACL) number, fees and details of your right to complain.
Judith is a single mum with two children. She is struggling to pay her multiple debts and her payments are now three weeks in default.
Judith met a professionally qualified finance broker who was able to help her:
>> Negotiate a one loan repayment plan;
>> Reduce her monthly repayments; and
>> Save her money on interest charges.
The benefits available to Judith are best illustrated in the following simple example. The example assumes that Judith has a mortgage loan of $300,000 and a credit card with a credit limit of $12,000:
Current Home Loan Credit Card Total Loans Your New Loan
Loan Amount: $300,000 $12,000 $312,000 $312,000
Interest Rate: 6.25% 18% n/a 4.75%
Loan Term: 25 years n/a n/a 25 years
Monthly Repayment: $1,979.00 $200.00 $2,179.00 $1,778.00
Total Interest Payable: $293,702 $18,931 $312,633 $221,630
From the example above you can clearly see that:
Judith has saved interest of: $91,003.00
Judith’s monthly repayments will be reduced by: $401.00 per month
So, if your debts are getting out of control or you are struggling to make ends meet. It is important that you seek help from someone who can fix your debt problems. This is the time for you to contact a professionally qualified finance broker who will help you to obtain a loan for consolidating debts with:
>> One monthly repayment; and
>> One lower interest rate.
Avoid seeking help from someone who makes unrealistic promises about getting you out of debts or who advertises that they can help you, no matter how much you owe. Remember to choose a reputed, qualified and experienced finance broker who will go the extra mile in solving your problem.