Debt Consolidation Loan – Consolidate your debt with Loan Consolidation
If you have various debts spread across different credit cards and store cards and other sundry loans, then you may want to consider a debt consolidation loan as a means of simplifying your finances and saving yourself some money.
What is a debt consolidation loan?
A debt consolidation loan is a way to draw together multiple loans and debts into one place with a single personal loan. Having debts in various places can cause real problems in terms of how they are managed. You need to be very well-organised to keep up with several loans at once. You will have different interest rates, with different monthly amounts, payable at various times throughout the month. Even if you set up automatic payments to deal with them, you can still be caught out by not having one simple paper reference in front of you. Budgeting for multiple loans is notoriously difficult.
What are the benefits of a debt consolidation loan?
A debt consolidation loan funnels all your borrowing into one place, and therefore calls on you to make just one monthly payment. You should also be able to significantly reduce the overall interest you are paying on your debts because you are able to spread your debt out over a longer period. Although you may well end up paying more long-term, your monthly payments may be reduced by hundreds of dollars which can make all the difference, especially in such a down economy when the short-term view has to take precedence.
Having a set term to the consolidation loan also means you can instantly begin to budget more effectively from month to month because you will have agreed a fixed repayment amount to suit your circumstances.
How often can I make repayments?
Monthly is normal, but you may be able to arrange to pay weekly or fortnightly if this makes budgeting easier. Depending on the purpose and the amount of the loan requested, you should be able to choose between a 12 month and 7 year repayment period.
How do fixed rate and variable rate debt consolidation loans differ?
As the names suggest, a fixed rate debt consolidation loan sets the amount of the monthly repayments in stone for the term of the loan, whereas a variable rate will fluctuate according to the Reserve Bank Interest Rate.
What to watch out for
Personal debt consolidation loans are not normally secured, meaning you do not have to put up some form of collateral as surety that you will pay your debt. If security such as your house is required, you will have to think carefully about the possible consequences.
Most debt consolidation loans do not charge any ongoing fees or early repayment fees, although a setting up fee may be payable. Check if you have the option of paying lump sums off the loan at no extra charge.
Featured Personal Loans
| Personal Loan | Details | Min Interest Rate | Min Comparison Rate | Min Loan Amount | Min Loan Terms | Apply Fee | |
|---|---|---|---|---|---|---|---|
 ME Bank Personal Loan | A low rate personal loan from ME Bank with no application fee for a limited time. | 13.59% | 13.81% | $5000 | 1 year | $0 |   |
 Aussie Personal Loan | A smart way to consolidate your bills to save time and money so you can pay for your holiday, a wedding or renovate the house. | 13.90% | 14.84% | $3000 | 1 year | $199 | |
 Sugar Money Personal Loan | Fixed rate personal loan with flexible options to get you funds when you need it. | 13.99% | 15.00% | $3000 | 2 years | $250 | |
 bankmecu Personal Loan | A convenient and fast way to purchase a car or debt consolidation with affordable rates and fees. | 13.49% | 14.55% | $1000 | 1 year | $150 | |
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