Debt Consolidation is thought to be one of the options to reduce the monthly payments of interest by grouping all of the various sources of debt into one loan payment reducing the amount of interest paid.

Some benefits of debt consolidation are:

  • Simplified monthly payments, by paying one lender, some examples of lenders that offer debt consolidation are FNB, Nedbank loans, Investec and anyone that offers a loan substantial enough to cover the debt owed to another institution.
  • You can improve your credit rating by not missing payments arising from complexity. This can further reduce the amount paid to interest.
  • They also offer personal loans information with rich tips on unsecured personal lending.

If you are considering debt consolidation you must consult a financial advisor.

Approved has some great information on lenders, loans and can help you find an advisor for your needs.

Excessive debt has become a common problem among people from many different walks of life. Economic downturns, slow wage growth and rising prices of consumer goods have all contributed to the problem. As a result, more individuals than ever now carry revolving debts that they are unable to pay off completely. These can include credit card debt with unmanageable interest rates, student loan debt that cannot be discharged with bankruptcy, or increasing monthly house payments without a corresponding increase in take-home pay. Despite efforts to budget their money, a number of people still find themselves taking on more debt just to keep up with necessities. Debt consolidation offers several possible solutions that can make these debts much easier to pay off, and this article will provide answers to some of the most common questions about this financial option.

The Basic Debt Consolidation Process

Consolidating multiple debts entails rolling all of them into one payment per month instead of several. The main advantage is that it can lower interest rates and thus allow you to pay more on the newly consolidated principal amount. A lower interest rate does not happen automatically in every case of debt consolidation. It depends on the types and total amounts of your outstanding balances. Some of the most common options include:

*    Combining several credit card balances into a new card account with a limited-time 0% interest rate *    Using a refinance cash-out plan if you own a home or some other types of property *    Taking out a consolidation loan from a bank or other lender

Many people have the best possible results from debt consolidation by consulting a financial professional and weighing all of their options carefully. According to their existing credit histories, some consumers may have an easier process qualifying for a 0% interest credit card. When applying for a debt consolidation loan, the main consideration is how well an applicant is able to budget for the new monthly payment. In cases of consolidated credit cards, paying off the principal before the interest applies is the main priority.

Debt Consolidation Eligibility

Many people opt for debt consolidation after they have exhausted other avenues of reducing their total debt load. If sticking to a budget and cutting expenses are not effective measures, some consumers consider bankruptcy as the only option. Debt consolidation is a better option because it does not impact a consumer's credit score quite as dramatically. In cases of obtaining a debt consolidation loan, applicants first need to determine their ability to make the payments on time every month. Along with their loan applications, they normally need to submit bank statements, wage records or similar documentation of monthly earnings. Prior to applying for a consolidation loan, individuals are advised to consider all of their current household expenses and budget carefully for consolidation repayments.

Debts That Consolidation Can Eliminate

In addition to credit card debt, debt consolidation can also help to ease the burden of these other forms of debt:

*    Medical debt *    Non-deferred student loan debt *    Mortgage debt *    High interest payday loan debt

In each case, you will qualify for a specific consolidation loan amount according to the total outstanding balances. The terms and conditions of the original debts can also affect your qualification for this type of debt relief, so it is a good idea to discuss these details with an experienced financial adviser.

What are the Other Options Instead of Debt Consolidation?

A debt consolidation loan from a bank or a credit union requires an initial application and documented proof of income per month. Some lenders offer secured consolidation loans that also require you to include collateral, such as property or a vehicle. The most common version is a home equity loan or line of credit.

In addition to debt management assistance, a good number of credit counselors operate as non-profit organizations and offer advice for creating reasonable budgets as well as for avoiding future large debts. Each of these options for consolidation loans can help consumers pay off the principal amounts in a shorter time frame and without the high interest charges.