IF YOU'RE making repayments on multiple loans to different lenders each month, there could be an easier and more cost-effective way to manage your debt.
To save yourself a lot of stress and money, why not consider rolling everything you owe - on personal loans, credit cards, and more - into one easy-to-manage loan?
Debt consolidation can be a good option for people facing financial hardship, but you don't have to be struggling to benefit.
Even if you can comfortably make your repayments each fortnight, consolidating gives you the opportunity to save money by securing a lower interest rate and a loan with better terms.
Here are some tips to make it work for you:
Look for a good deal
IF YOUR goal is to save money, make sure your new interest rate is lower than what you're currently paying.
Don't forget to take the fees and charges into account.
You can do this by checking out the comparison rate.
The comparison rate is a rate which includes both the interest rate and the fees and charges relating to the loan, combined into a single percentage figure.
This will make it easier for you to compare different loans from different lenders.
Check for penalties
YOUR existing lenders may charge you to pay off your debts early.
Look through each contract to see what it will cost you to end the agreement prior to the end of the term.
Keep in mind that the interest rate savings will usually more than make up for the cost of any early repayment fees.
Don't go deeper
WHEN looking to consolidate, try to avoid extending the length of your loan.
Remember that while a longer loan term will reduce the size of each repayment, you could end up paying more as the interest accumulates - even with a lower rate.
It's best to try paying off your loan as early as your budget allows.
Also try to resist the temptation to add a little extra on top of the new loan; consolidating only works if you reduce your overall level of debt.
Once you've transferred the balance on your credit cards, cut them up and close the accounts!
Avoid quick fixes!
IF you've ever seen an ad for "speedy cash" or "money in minutes" you're dealing with a payday loan.
Despite their sky-high rates and bad press, pay day loans are still popular.
In fact, new research from Digital Finance Analytics has found that as many as one in five households in Australia have used payday loans over the past three years.
While a quick cash injection might sound like the answer to your problems, in most cases they will cost you a packet in fees and massive interest rates.
At the higher end of the scale you might end up repaying as much as three times the amount you originally borrowed!
Adding these repayments to your existing debts can be a recipe for disaster, leaving you in a far worse financial position than where you started from.
Work with someone trustworthy
AS this process can take time and effort, make sure you work with a reputable organisation, such as the team here at MOVE.
A reputable lender will take the time to understand your financial situation, and will always be upfront about all fees, charges and repayments.
Is it time you took control of your debt?
Then it might be the time to consolidate.
To discuss strategies for getting on top of your debt phone 1300 362 216 or visit www.mymove.com.au.