Debt consolidation can be a positive step to take if you’re looking to take greater control of your financial affairs. There are many reasons you might be considering a debt consolidation solution. Though debt consolidation can be a positive step to take, it is important to go into such a process with your eyes wide open, both in terms of what debt consolidation is as well as the product or service you use to help you.
Here’s what we think you need to know about debt consolidation, and how you can find a reputable company to help you regain control of your financial affairs.
Debt Management as a Whole
Debt consolidation may be used as part of a wider debt management plan. In this instance, you might be someone who has numerous debts, perhaps from personal loans, credit cards, or other sources, and are starting to struggle with servicing interest and making the repayments. If you find yourself in this scenario, then debt consolidation could help you to clear your debts and avoid any further negative impact on your credit history.
Other options when it comes to debt management might include negotiating a repayment plan with creditors yourself or even working with a debt management company to manage your accounts. One advantage that debt consolidation can have over these options is that when you consolidate your debts you’ve paid off your existing creditors right away, so are left only having to manage the one payment. Although the other options do have their benefits they could also mean your accounts fall into default or it takes you longer to become debt free.
“One advantage that debt consolidation can have over these options is that when you consolidate your debts you’ve paid off your existing creditors right away, so are left only having to manage the one payment.”
Understanding Debt Settlement
If you’re still unsure whether debt consolidation is for you, then debt settlement is another debt management strategy you might want to consider. Whereas debt consolidation and debt management plans generally involve paying off your debts in full as they stand today, debt settlement usually means negotiating a one-off payment to your creditors in return for accounts being closed.
Creditors are usually willing to accept debt settlement proposals if they represent a fair percentage of what you owe. If you are facing financial difficulties and are unlikely to be able to pay your debts in full over the coming months or years, creditors will often accept a one-off lump sum payment now rather than risk getting much less, or nothing, from what you owe.
While it may be difficult to secure a lump sum if you’re already facing financial difficulties, it is something worth exploring if your credit report is still in good standing and you are likely to be accepted for a personal loan. If you can negotiate a settlement figure prior to applying for a loan you might even be able to borrow less than you would if you opted for a full debt consolidation.
What is Debt Consolidation?
The principle behind debt consolidation is a simple one. Debt consolidation is the process of moving all of your debts into one place, thus paying off your existing debts and consolidating several payments into one. Many types of debt consolidation are available, and these may include using credit cards with balance transfer promotions or debt consolidation loans.
Debt consolidation can be useful both as a solution for anyone who might be starting to struggle with meeting all of their repayment obligations, but equally for anyone who simply wants to make managing their finances easier. After all, budgeting for one repayment leaving your bank account each month is often better than having to manage several of them.
“The principle behind debt consolidation is a simple one. Debt consolidation is the process of moving all of your debts into one place, thus paying off your existing debts and consolidating several payments into one.”
Finding a Debt Consolidation Company for You
Finding a reputable debt consolidation company is straightforward if you know what to consider, and what to avoid, when looking for a consolidation solution or a personal loan. The company you choose to help you with debt consolidation will depend on the type of consolidation you are looking for, but in general, you should ask the following questions:
- Will my debt consolidation solution allow me to become debt free quicker?
- Is the debt consolidation solution cheaper than what I’m currently paying?
- How will my consolidation company help me to clear my debts?
The third question is an important one in the context of debt consolidation. Some people use debt consolidation as a means of freeing up their existing credit and not to become debt free, while some will take out a debt consolidation loan but not use it to pay off their debts.
If you take out a debt consolidation loan with NOW FINANCE, we will pay your creditors directly so you don’t need to. This also means your loan is used for the purpose it was intended for, though it’s then up to you to not access any remaining credit accounts that may still be open while repaying your loan.
If you want to know more about debt consolidation from NOW FINANCE, contact us now to discuss your needs.
DISCLAIMER: This article contains factual information and general comments only so does not take into account your objectives, financial situation or needs. Before taking any action, consider the appropriateness of this information having regard to your individual circumstances and always obtain and consider relevant disclosure documents before applying for a particular product.