Debt Consolidation > What is it?
Debt consolidation is the act of consolidating your existing debts into one larger, but more manageable debt consolidation loan. Consolidating your debts in this way means that you will pay off all your individual debts and replace them with one larger debt. Debt consolidation does not rid you of debt out right, instead, it makes the management of your debt easier by giving you just one creditor to concentrate on repaying.
Debt consolidation > Key facts:
- Take a loan to repay your smaller creditors
- Consolidate your existing debt into one loan facility
- Concentrate on repaying one creditor
Consolidating Your Debt – How does it work?
There are a number of stages to debt consolidation. It is essential that you follow the process from start to finish in order to consolidate your debt effectively:
1 – Talk to an experienced debt adviser and discuss your debt consolidation options. (debt consolidation might not necessarily be the right option for you)
2 – Prepare a detailed list of all your creditors whose debt you wish to consolidate. Contact them and ask for a settlement figure. Make a note of all your settlement figures and calculate how much you need to borrow to consolidate all that debt.
3 – Talk to a debt consolidation specialist about finding a debt consolidation loan. A specialist advisor will discuss your options and find the right debt consolidation loan for you.
4 - Arrange your consolidation loan and make your loan application. The application process and the terms you get will probably depend on your current credit history.
5 – Repay your creditors. If you’ve used a professional debt adviser they may well handle this part of the debt consolidation process for you. Whether they do, or they don’t, make it your business to ensure that every one of your existing creditors has been repaid.
Debt Consolidation Loan - Finding the right loan
It’s not easy finding the right loan. There are a multitude of factors to consider that an experienced debt consolidation adviser is qualified to discuss with you. Some things to consider include:
- Current credit rating
- Amount required
- Repayment terms
- Chargeable fees
Debt Consolidation is not the only option!
Before deciding whether debt consolidation is right for you, take some time to discuss your debts with an experienced and reputable debt adviser. Debt is a serious matter and just because debt consolidation is right for one person, it doesn’t necessarily mean its right for you.