Resolve Your Money Issues and Get on With Your Life

Debt consolidation or refinancing as it’s sometimes known, can be done either with or without a loan. If it’s done without taking out a loan, it’s usually referred to as debt management.

A debt consolidation loan is a loan which you can use to pay off existing debts – personal loans, credit cards, overdrafts, store cards, catalogues or unpaid bills. Rather than having to cope with paying all these bills individually which can add up to an uncomfortably large monthly outgoing, you can take out a loan to pay them off and replace them with one single monthly payment.

Consolidating like this can often reduce your monthly outgoings by up to 50% although the time taken to repay the loan will increase.

A debt consolidation loan can be a great way of getting your debts into a manageable state, but it is a large monetary commitment so it’s vital to shop around and make sure you get the loan that’s right for you and your family. It’s easy to find information and get a quote on the web, so you can compare the interest rates and charges and choose the correct debt consolidation loan for your particular financial needs.

A debt management scheme, on the other hand, does not involve a loan. The debt management company will contact your creditors to try and put a stop on interest, and then negotiate a repayment schedule on your behalf. A debt management scheme can generally only be applied to unsecured loans.

You will need to talk to the debt management company and agree with them how much you can afford to repay – they will pay this on to your creditors. For this, they will generally charge you a monthly fee. Your credit rating will probably be adversely affected by this as you will most likely receive notices of default despite the agreement.

Both methods have advantages, for example you will find it easier to budget on a monthly basis if you are replacing many smaller and harder to track payments with one larger one. There’s less chance of missing a payment by mistake and your total outgoings should be lower as you will have paid off smaller higher interest loans with a lower interest larger loan. Extending the repayment period, although it means you will pay more overall, can reduce your monthly outgoings and give you the breathing space you need to get your finance back in order.

Whichever method of consolidation you choose, it’s important that you ask questions and find out exactly what the cost is. Will a debt management company need a big down payment? What will their monthly charges be? How much will you have to repay in total if you take out a debt consolidation loan? What will the interest rate be?

There are voluntary and charitable advice groups which can help on money problems so if you’re unsure on the best way to deal with your debts, give them a call or check out their websites for more information. If you take the right advice and shop around, you can soon resolve your money issues and get on with your life.

Source by Andy Bond

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