What is a consolidation loan?

Consolidation loans are effective tools in clearing debts. A consolidation loan is a loan type that essentially brings in together all your loans into one neat and tidy loan. Here are some handy tips on finding the right consolidation loan and better managing your debt.

Know how much you owe

If you’re planning on paying every debt you have with this loan, then add up everything. This includes your bills, credit cards, apartment, and unpaid loans. Debt consolidation will help you pay for everything. In merging all your debts into one place, you are more aware of how much money you owe. Create a list of all the debt that you owe. Organising your debt is key as you can better prepare yourself with banks or lenders.

One of the easiest ways to calculate your total debt is to get a copy of your free credit report from the three credit reporting agencies in the country. You can see all your updated borrowing activities, including your dormant accounts and unpaid bills. Each file also has a record of the card credit enquiries, which are reported by your potential creditors to the credit reporting company whenever you apply for a loan.

What are the debts that you want to consolidate?

If you’re planning on consolidating everything, that’s great. If however, you’re planning to consolidate only a few, look for the debt that has the highest interest. They’re the ones that cause your debt to constantly rise. Calculate everything in advance and then get in touch with a bank or alternative lender. 

Provide proper documentation for your proof of income

Some lenders need to make sure that you are capable of repaying the loan that you are applying for. Take out documents- payrolls, cheques- that will help determine whether you are capable of repaying the loan or not. Show them every document so that they don’t miss a single one. For verification, provide lenders with your credit report. This will help them better assess your repayment history.

Most lenders check this so that they can determine whether or not the person who is applying is responsible and capable of making repayments. Thousands of Australians have bad credit. If you know that you are one, show that you are motivated to improve your financial situation. A debt consolidation loan is made for people with bad credit. If you are taking an active step towards fixing your debt; you can get back on track and improve your credit score at the same time. This will require responsible budgeting and better management of your finances. Fortunately, there are tools that can assist you in staying on the right path.

Find a specialised lender

Finding a lender can be hard, especially if you have a bad credit score. The key is to research online. Look for a lender that offers competitive rates, yet provide honest and personalised customer service. Bad credit loans are designed for people who may or may not be in a complex financial situation. The right lender should be able to recognise your situation and recommend the most effective and efficient solution.

Determine how much you are willing to pay each month

Grab your credit file as well as your latest bank and credit card statements. Make a detailed list of your living expenses-including the recurring expenses plus the amount spent on each of them. You don’t have to cut your overall spending dramatically. The trick is to simply assess what major expenses are not necessities. This may include your monthly Foxtel bill or your monthly subscription to youtube premium. By making small adjustments to your spending, you can reshift your budget and make more repayments to your debt.

It is also important to put your extra money into your emergency account so you won’t be tempted to get a new credit card or a new loan when unexpected expenses appear. We recommend setting aside at least 3 months of living expenses to cover any emergency bills that may come up. You could put this money into an interest-bearing savings fund and use it when needed.

When consolidating your debt, you may have to opt for a frugal lifestyle. This is normal. Whether you’re itching to visit Machu Pichu, or buy a new car; you need to be persistent. By saving your money;l you are making timely payments on your loans. In the long run, this will save you time and money.

Get back on track with Debt Consolidation Loans.