Why pay multiple debts…
At different interest rates…
Over different timelines…
And potentially pay back thousands of dollars more than what you borrowed…
When you could forget all of them today?
Credit card debt, high interest ‘pay day’ loans, other personal loans you might have taken on — all of it.
That’s what we’re talking about when we say ‘debt consolidation’.
Debt consolidation is the process of taking all your existing debts and paying them all off with a single new loan.
The idea is that rather than paying, say three loans off at an average interest rate of, for example, 20%, you instead take a new loan that covers off the old ones and charges you a lower interest rate to repay it.
In our experience serving hundreds of Kiwis here at Loanplace, debt consolidation isn’t just a financial no-brainer.
In most cases, we see it as the number one thing you can do to simplify your existing financial situation, remove some of the stress that comes with servicing multiple loans and regaining some control and predictability.
Debt Consolidation: Crush Your Credit Card Balances and Outstanding Personal Loans Immediately
We’re publishing this short article to show you three reasons why consolidating your existing debt might be the right money move to make right now.
Reason 1: You have high interest debt that’s eating into your weekly pay
Maybe you took a pay day loan recently to cover off some unexpected expenses.
It was handy at the time.
But now it’s costing you an arm and a leg every week in repayments because the interest rate is in the hundreds of percent (learn more about the realities of pay day lending).
If you are paying off loans like this, consolidating them down into a single, lower-rate loan might make perfect sense.
Reason 2: You’re struggling to keep track of multiple debts and repayment deadlines
Paying off multiple loans can be a real headache.
You’ve got to keep track of which days the finance companies will debit money from your account and balance your income and other expenses with that.
If you’re working or running a household, this can quickly become stressful and put you in a worse financial position.
Consolidating all that debt down (if it makes the best financial sense — and our consultants here at Loanplace can help you determine this) can help alleviate this stress of paying multiple loans.
Imagine it. Instead of worrying about three, or four, or five direct debits chipping away at your weekly budget…
You could instead just have one!
Reason 3: You want to simplify your financial situation and stress less about repayments
If you’re looking to rebalance your financial situation — maybe save for a house, invest in some renovations or start a new business — one of the first things you’ll want to do is get rid of what we call ‘bad debt’.
Bad debt is what we’ve mentioned above.
It’s high interest debt that has a major impact on your financial situation.
Better debt is, essentially, debt with a lower interest rate, giving you lower repayments on the track to getting debt free and ultimately improving your situation.
Debt consolidation can be a huge tool for those in this position.
TL;DR: If you’re paying high interest loans off (especially if you’re paying multiple loans) you might want to consider consolidating your debts down into a new, lower interest loan that allows you to pay less interest and worry less about repayment deadlines.
If you have a question about debt consolidation, we’d love to help!
See what’s possible with our easy-to-use Debt Consolidation Calculator.
You can also get in touch with us on 0800 461 228 or email us directly at [email protected].