It is estimated that around 12 million people across South Africa are currently using a credit card. If you happen to be one of them, then you may be all too familiar with the frequent interest rate increases and the growing levels of personal debt affecting South Africans. That’s why a growing number of people are turning to debt consolidation, but is it ever a good idea to take out a loan to pay off other debts?
Instead of paying 3 different monthly payments to multiple lenders all with different interest rates and repayment amount, you would take out a debt consolidation loan to cover all of those debts.
These accounts could then be closed leaving you with only one loan, one interest rate and one repayment. In most cases the monthly repayment is less than the combined payments on other debts.
For clarity, we do need to point out that you could potentially end up paying a larger total sum in the long run, so you will need to calculate this and determine whether the monthly savings outweigh the overall cost.
Debt consolidation also makes it much easier to manage your debt. You will have a single loan agreement and that means only one set of paperwork, one monthly repayment and one lender to deal with. It is much easier to stay on top of your debt repayment when it is streamlined like this. For many people, this is reason enough on its own to consider debt consolidation.
Debt Consolidation Loans
Have you created a financially unstable situation for yourself over the years? Have you used credit cards and other sources of credit in order to purchase necessities in life such as groceries, clothing, and gas? Do you find yourself constantly receiving phone calls from creditors wanting money for the incredible debt you have created for yourself? If you find yourself working long hours only to be broke within a day or two of receiving your pay check you might want to consider consolidation loans. These are one of the best ways to get numerous creditors off your back and help get more money back in your pocket.
Types of Debt Consolidation
If you are considering consolidation loans to help you out of your current financial trouble you need to understand the different types available. There are secured, personal, and home consolidation loans. Each one of these loans serves a different purpose.
Once you have thoroughly researched the different types of debt consolidation loans available you can proceed with the application process. Upon approval of your chosen loan you will be able to pay off all of your smaller loans. This will leave you with one loan that requires monthly payments. With only one loan to pay, you will free up necessary funds for the day-to-day living expenses that you may currently be struggling to meet. Consolidation loans can prove to be the ultimate solution to get you back on stable financial footing once again.
We recommend comparing loan providers to see which provider is right for you.