Checking in for a debt consolidation loan to absorb all your outstanding utility bills, unpaid defaults and high-interest credit card debts? If so, there are many things you need to learn about debt consolidation before you sign that dotted line on the agreement. Read Our Debt Consolidation Facts below.
If you’re having difficulty juggling payments on multiple loans or credit cards? Then you may want to consider consolidating these debts into one easy-to-manage loan with a single monthly payment – this is known as debt consolidation. Here are some pros and cons to help you make an informed decision when choosing whether to consolidate your debt or not.
Unsecured Debt Consolidation
Most banks prefer secured loans which have lesser risks of nonpayment in case of default. However, there are financing companies offering unsecured debt consolidation loans to people with a clean credit file. That’s one of the perks of having a good credit score. Lenders entrust you with their money because of your good repayment history.
If you are less likely to default on your loan, then lenders can’t see reasons why they won’t grant your loan application despite the absence of collateral. But, if you have poor credit, lenders would consider you as a high-risk borrower. They have to find a way to compensate for that risk, by requiring you to attach collateral like your home as a security for your loan. If you default on your payment, they will go after your property.
Here’s the good news – Australian Lending Centre offers personal loans that you can use to consolidate your defaults and all other existing loans. This type of unsecured debt consolidation loan can get you up to several thousand dollars. Even if you may be assessed as a bad credit borrower because of a poor credit score, we will ensure that your existing debts and defaults are paid out, at an interest and loan terms favourable to you.
Can I Secure My Bad Credit Debt Consolidation Loan With A Car?
If you prefer to get a higher amount of loan, you can apply for a secured debt consolidation loan.
You can also offer the lender your motor vehicle or any other valuable property accepted by the lender, as a security to get higher chances of getting a debt consolidation loan to pay your unpaid defaults, personal and business loans as well as utility bills. There are many lenders who are also more than willing to cater to your financing need if you will secure the loan with your car. But, your car has to be reasonably current and it is free from loans, or other credit issues. But, if your car secures some credit issues, with financing against it – then it will not qualify as a security for your loan. It must be reasonably current as well, with no hidden defects. How much does the debt consolidation loan cost if it is secured by a car?
If you‘re looking for a secured debt consolidation loan, then you may have to consider the actual value of your car. Remember that the value of the loan is only a percentage of the value of the car. It cannot go higher or be equal to the car’s value.
Can my Family Members bail me out of financial troubles?
Here’s one of the debt consolidation facts that often gets forgotten… Sometimes, it is easier to borrow money from your loved ones or ask them to borrow money on your behalf. If you are married and your spouse has a healthy credit file and sufficient income, he or she can take a personal loan and pay all your debts. Parents can take the loan on behalf of their children and the other way around. This option is much better than getting an income guarantor. But, not everyone is willing to shoulder your loan obligation. It is not also advisable for people who have debt repayment issues. People, who have been in a debt rut for years, also need to face their own financial concerns instead of relying on their loved ones for help. In fact, it is very unhealthy to bail out someone who keeps on mismanaging money every time he or she is caught in a debt trap.
Debt Consolidation is the only first step solution to debt consolidation BUT not a cure!
If you want to enjoy immediate debt relief, consolidate your debts. It simply allows you to roll all your debts into one big loan. You get to pay all defaults, and you will still have a few extra for your needs. But, will it cure your debt problems? No. If after consolidating your debts, you still take out new debts and fail to keep up with the payments, you may still end up trapped in a cycle of debt.
Getting into debt is not an overnight misstep. In fact, it takes several debt defaults before you get a poor credit score. That is why debt consolidation can only address the problem on the surface. It pays all your debts and gives you spare money for your immediate needs. But, to get rid of debt once and for all requires financial discipline and good money management habits. That’s why Wealthy You assists borrowers in making a financial decision not only in terms of loan product selection but in determining the loan amount and payment schedules appropriate for your situation.
Important Answers to Your Questions with Regards to Consolidating Your Debt
Does consolidating your debt ruin your credit?
While consolidating debt does not 'ruin' your credit, if you’re taking out a new credit facility, your chosen lender will likely undertake a credit check, which will be recorded on your credit file. If you have recently applied for multiple lines of credit, then these all do add up on your credit file and may result in your score being lowered.
Can I consolidate debts with bad credit?
You can still consolidate debts if you have a lower-than-average credit score, however lenders may apply a higher interest rate based on your credit score and historical ability to meet your repayments.
If you have any more questions or need further assistance, feel free to contact us. We're here to help!
info@wealthyyou.com.au
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