Dealing with multiple credit commitments, managing varying payment dues, and complying with their different interest rates can be overwhelming. These financial responsibilities are economically and mentally draining, especially if you're drowning in work and family obligations. Instead of powering through until you pay back every lender on your list, you can turn to debt consolidation loans.
I know what you're thinking: how can another loan application help you deal with existing credit woes? That's a good question and a crucial one.
This article will help enlighten you about debt consolidation and how to take advantage of it. For starters, let's define this type of loan and how it differs from other forms of borrowing.
How does debt consolidation differ from other loans?
Applying for a debt consolidation loan is consolidating your existing debts into a single account. The primary goal is to simplify your loan, combine all your balances, and pay them off on a single payment deadline. The combined balances have a single interest rate. Your credit rating will define the interest percentage.
Can anyone apply for debt consolidation?
Debt consolidation lenders in New Zealand require borrowers to be of legal age. They must either be a permanent NZ resident or hold a valid work visa.
If you fit the categories defined above, all you need is proof of identification issued by a government entity. More importantly, lenders expect you to use a vehicle or real estate as a collateral asset to secure the loan.
What's the best time to apply for loan consolidation?
When is combining your loan balances most convenient? Before taking out a loan, you should answer yes to any of the questions below.
Do you always miss your payment deadlines?
One of the problems with having multiple creditors to answer to is it's easy to miss payment deadlines. A missed due date means late fees and additional charges. Unless you set a reminder and religiously check your to-dos for the month, it can be hard to break the habit.
Since consolidating your loan allows you to follow one due date per payment period, this option is the best way to prevent you from incurring extra fees!
Do your debts have varying interest rates?
Some lenders charge higher interest rates than other financing firms. These differences can be inevitable because they rely on your credit record and the type of credit you avail of for the computation. Although this aspect is out of your control, combining your balances through debt consolidation can help.
Consolidating your debt can help lower your overall interest rate. Before you apply for a loan, do your computations first. You can also ask a debt consolidation consultant in NZ about their firm's computations and see if you can benefit from their offered interest rate.
Do you want to clear your debt and improve your credit score?
Debt consultants in NZ know that the ultimate way to free yourself of debts in the future is to combine your balances through consolidation. This option helps you pay a uniform interest and set a clear timeline that is more favourable to you.
Whether it is a personal loan, a housing loan, or an emergency loan for a car repair, you can finally break free from these financial burdens one day!
These are all the benefits of consolidating your debts and why you should take this step. However, don't forget that this option is only beneficial if you do your part: be a responsible borrower and don't waste this second chance to enjoy a positive credit rating!
