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Insights on money, career and trading

Taking Control of Debt: Making Sense of Debt Consolidation

Posted on February 26, 2015 by Daniel at 1:04 am

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The decision to consolidate debt is a bold one. After all, you have recognised that you have a problem with debt and as such you are keen to remedy the problem. When it comes to consolidating debt, there are some things that you need to be aware of. After all, debt consolidation programs are not there to sort out the deeper, financial worries that you have.

They can be a smart financial move to take. But, you need to ensure that you are armed with all of the facts before you make this kind of decision.

Consolidating Debts: Starting at the Beginning

Debt matters. So much, so that many of us look at ways to be rid of debt in the shortest time possible. As such, a consolidation loan can ensure that you are making the right steps to becoming debt free. You simply take out a loan that covers your existing debt. That results in you paying back only one loan, at the same time every month, with the same rate of interests. It can help you make sense of your finances in a more robust way. But, it can ensure that you have an element of control over your money. You only deal with one creditor. With this, you can minimise problems that arise from speaking to multiple creditors about your finances.

Calculations

So, if you are going to opt for the debt consolidation loan route, the most important thing that you can do is to work out how much you owe. Then, work out how much you can afford to pay back. This needs to be a realistic sum. After all, you don’t want to end up in further debt as a result of miscalculations. Ensure that you are only taking on a debt consolidation loan that you can afford to pay back. If you cannot afford to pay back your consolidation loan, you will end up with your credit rating being affected. This can harm your chances of obtaining credit in the future.

With this in mind, it makes sense to source a loan that is fit for your needs. If you have a good credit rating, your high street bank may be able to help. But, if you have a poor credit history, an independent company that offers an AAA debt consolidation loan will be the best choice. Always make sure that you borrow what you can afford to repay.

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Christian Schnettelker

Making Sense of Consolidating Your Debts

Any pertinent financial decision requires further research. You may not have to take out this kind of loan if your debts are nominal. What’s more, the rate of interest on a debt consolidation loan may not be as favourable as the loans that you already have. Ensuring that you are not paying more in the long term is the easiest way to get out of debt quickly and easily.

The road to becoming debt free is a marathon, not a sprint. Make sure that you make the right choices for your financial health. After all, there is no better feeling than taking the right steps to becoming debt free.

 

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