Bad debt consolidation is a method of packaging together all of your debts so that you only have one creditor to pay to each month. This makes managing all of your financial obligations a lot easier, and will often help you to save a great deal of money on interest charges as well. Here are some basic tips on how to consolidate your debt.
It is first important for you to work out exactly how much money you need to consolidate. This would mean including all of your loans, overdraft, credit cards, and all other financial obligations into the mix. Look at the payments that you are making to each, what the interest rates are on them, and what the overall balance of your debt is.
Once you’ve done this you will then need to look into the different options available. There are several different ways of consolidating your debts, some of which may be applicable to you, and some of which may not. Consider the virtues of each option and then simply choose the one that is most appropriate.
One of the most common options would be to get a debt consolidation loan. These types of loans will help you to consolidate all of your financial obligations into a single package. You have a certain amount of money to pay each month towards the loan, and will know exactly how long it will take to cover the entire balance. In the majority of cases this term will be between three years and five years.
If you are a homeowner then releasing some equity from your mortgage is an excellent option. To make this option a reality you will usually need to own at least 50% of your property. If you do, however, you should be able to remortgage, releasing equity, and then using this equity to cover your financial obligations.
If it is only a few smaller credit cards that you want to consolidate, simply getting a bigger credit card to cover all of your smaller ones might be an appropriate route to take. This is especially the case if you are only paying the minimum payment towards your credit cards, thus only covering interest in the main. If you get a larger credit card to consolidate these then you should benefit from an introductory period that will help you to reduce your interest and pay more of the balance.
If possible it would be a good idea to borrow some money from a family member or trusted friend. This would certainly be the most flexible and the most affordable option
Check out our super bad debt consolidation tips now in our comprehensive guide to everything you need to know about Bad Credit Loans South Africa.
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