Life can be unpredictable. We don’t always have cash available to meet our needs and may have to occasionally rely on borrowing options available. The National Credit Act has introduced a number of regulations that have made things easier for consumers to be protected against unscrupulous lenders such as loan sharks. Consumers now have numerous options available besides traditional lending institutions.
Getting into debt requires diligence and dedication to ensure that payments are made on time. Bad debt can be a result of a major shift in the economic climate, poor decision-making or bad circumstances such as a divorce or medical emergencies, etc.
Debt consolidation can be a simple, effective debt management tool used for when you have multiple debts and are struggling to pay them off.
What are the benefits of debt consolidation?
You are provided with access to enough money to pay off all your debts – helping you stabilise your financial situation quickly.
You have a much easier payment method. You only have to pay one instalment per month.
You may potentially benefit from lower interest rates.
The process does not have a negative impact on your credit rating.
Consolidation loans are offered as secured or unsecured options.
What are the disadvantages associated with debt consolidation?
If you get a secured consolidation loan, your property will be pledged as collateral. In some cases, your retirement fund can be held as collateral.
Repayment terms can be longer than the original loans.
Unsecured loans may be more difficult to come by and they often have higher interest rates as well as stricter terms of repayment.