DEBT CONSOLIDATION IN AUSTRALIA

DEBT CONSOLIDATION IN AUSTRALIA

Debt Consolidation is the process of bringing together ones debts from various sources, amalgamating or consolidating them into one single debt usually at a lower rate of interest. The resultant single debt is also known as a debt consolidation loan.

This process of debt consolidation has become very popular in the recent times because of the flexibility and simplicity it offers to the takers. Debt consolidation becomes an irreplaceable tool when an individual or business is indebted by high interest loans and is interested in replacing them with a debt consolidation loan that carries a lower interest rate. Debt consolidation has also become popular because of the ease in making one payout instead of many which can again be negotiated to be weekly, fortnightly or monthly.

Debt consolidation involves very common debts like credit cards, mortgages, student loans etc. The most common of these is credit card debt since this debt carries a very prohibitive rate of interest usually nearing 20% p.a.

Debt consolidation has become popular in Australia since Australia has always been known for its high interest credit cards. An Australian holding two or three credit cards being charged at about 20% p.a., would only be happy to manage and consolidate his owing at 7-10% interest bearing debt consolidation loan. Not only, would he would save a lot of money in the process, he will have lesser monthly payments to bother about.

Debt consolidation works with almost all kinds of loans available in Australia today. Another reason why debt consolidation has caught on in Australia is because of the highly competitive marketplace with products having extremely higher rates of interest.

Debt consolidation in Australia is still growing in popularity, since the number of lenders is on the rise. Australians with loans taken at higher rates of interest are replacing them with lower interest ones making use of the "honey-moon period" bearing further lower interest rates to pay off the old debts.

The awareness of the advantages of debt consolidation has become wide-spread especially in regard to:

Negotiating with their creditors for paying less, Getting a debt Consolidation Loan, Going thru the debt agreement with a magnifying glass in case of trouble

Debt Consolidation loans available in Australia are of various kinds and are widely classified as per objectives. They are debt consolidation, mortgage consolidation and bill consolidation. As the types signify a normal debt consolidation loan is used to pay off personal debts like personal loans and credit cards. A mortgage consolidation deals with getting all your housing debt under one loan thereby reducing mortgage payouts and offering flexibility of a negotiated and single payment. Bill consolidation on the other hand deals with a loan that amalgamates all due bills into one single loan and again offers the flexibility of negotiated and lesser payouts.

In case of need, the advice is to do your calculations and shop for the best debt consolidation loan and options in the market before deciding on one. Various lenders offer various sops from time to time. It is up to you how you can turn them to your advantage.

Bill or Debt Consolidation

Bill or Debt Consolidation

Bill consolidation is the process to taking all your outstanding bills and putting them into one, a consolidation loan. Instead of paying separate bills, you make one payment to the debt management or bill consolidation company. This payment also contains any fee the company charges. There are many companies that will help you do this called either bill consolidation companies or debt management companies. The idea of bill consolidation is to eliminate your short-term debt within 5 years.
If you find and use a reputable company, you should be able to become debt free, have only one monthly payment, eliminate collection calls, avoid bankruptcy, waive late fees, and lower your interest rates and monthly payments.

So how do you know if you need a debt-consolidation loan? If you it find it difficult to manage all your bill payments, you cannot deal with several creditors at the same time, you are not current on your bill payments, or you want to save some money and put all your bills into one easy payment.

You should do some things before you go to a company to pursue a debt consolidation loan. Take a good hard look at your monthly income and work out a budget for yourself. Figure out an amount that will be comfortable to pay on your loan. Next calculate your total debt amount; this will let you know how much you need to borrow. Then decide which bills you are going to use the loan money for. Lastly, check your credit report so you can see what problems you can fix with the consolidation, and to make sure there are no surprise judgments or collections against you. Bill or debt consolidation can also help repair your credit.

A home equity loan is another option for bill consolidation, as your home will be used for security by the lender. Shop around before you do this or any kind of bill consolidation loan. You will get better rates if you have a steady job, a decent credit score and in the case of the home equity, how much you already have invested in the house. Many credit-counseling agencies will assist you with this. They will help you reduce your monthly payments. Naturally, all of these options have fees involved. Usually it is about 30-40 percent of the amount of money they save you.

Debt that is secured (such as a car loan) cannot be included in bill consolidation loans. Unsecured debt can be. This includes credit card debt, student loans, and medical bills.

It is possible to save money with a bill consolidation plan but how much will depend on several factors. A lower rate than you already have on your consolidation will mean you will pay less in the long run. The longer you take to repay your debt consolidation loan the more you will pay overall.

Quick Tips On Debt Consolidation

Quick Tips On Debt Consolidation

by Melissa Kellett

Debt consolidation is not such a complicated process and it can provide many advantages to those who are buried deep in debt due to excessive spending or unexpected circumstances. Here are some tips to understand debt consolidation and make the most out of it.
Debt consolidation is ideal for getting rid of that expensive credit card debt that can cost you up to 20% in terms on interests for financing unpaid balances. Credit card debt is probably the most expensive kind of debt only comparable to payday loans and cash advance loans. Thus, using debt consolidation to eliminate it is a smart thing to do.

Interest Rate And Collateral

The interest rate charged for debt consolidation loans tends to be lower than the rate charged for many other financial products, especially credit cards and pay day loans. However, this is due to the fact that most consolidation loans are secured loans. The collateral used to guarantee the loan is the equity left on your home. Consolidation loans are thus, home equity loans or second mortgages.

There are unsecured consolidation loans as well but these loans charge a significantly higher interest rate and due to the unsecured nature they are harder to qualify for. Thus, they are not so convenient for those buried in debt and are only suitable for those with small credit card debts that they want to consolidate to bring some ease to their income.

Debt To Consolidate

Not all debt is suitable for consolidation and this fact has to be taken into account when considering debt consolidation programs. If you want to consolidate your debt you need first to know the nature of your debt. Credit card debt is perfect for consolidation but subsidized student loans are not.

Basically, high interest rate debt is suitable for debt consolidation as long as there are no pre-payment penalty fees associated with it. And subsidized loans or loans with low interest rates such as federal student loans, government loan for first time home buyers, mortgage loans or home equity loans can be consolidated but nothing good can be obtained out of it.

Reducing The Monthly Payments And Saving Money

By consolidating your debt you can reduce the amount of money you pay each month in terms of debt repayments and you can save money. These two things can sometimes be done simultaneously and then, debt consolidation is undoubtedly to your advantage. However, it is not always possible to reduce the monthly payments and save money at the same time.

By extending the repayment program you can reduce the monthly payments. However, since the interests are calculated on a yearly basis, an extra year implies adding up to the overall interests and thus extending your loan repayment schedule too much may imply that you will lose the money you where saving, in the long run.

Thus, if you want low monthly payments and saving money at the same time, you need to find equilibrium between the loan length and your ability to face the monthly payments. If your monthly payments decrease due to a lower interest rate, there is no problem, but if you reduce them by extending the loan period, you are actually spending more in the long run.

Is Debt Consolidation Always To Your Advantage?

Is Debt Consolidation Always To Your Advantage?

by Devora Witts

You may wonder if by consolidating your debt you really will be able to reduce your income-spending ratio and obtain monthly payments you will actually be able afford. This is a question that needs to be answered by carefully considering your debt as debt consolidation cannot be successful with all kind of loans and other debt.
If debt and bills keep pilling up you may eventually have to make a decision. Whether that decision is to take a debt consolidation loan, contact a debt consolidation agency or resort to more critical decisions like filing for Bankruptcy, it is definitely a choice that cannot be rushed in.

Debt Consolidation = Debt Reduction?

Debt consolidation in particular can provide up to a 70% of debt reduction in certain situations, however, this is an ideal scenario. Only if your debt is composed of unsecured loans and credit card balances or store card balances you will be able to achieve such amazing results.

However, if too much of your debt is secured, it is less probable that you will be able to obtain such a significant cut on your debt. Moreover, there are certain loans that though not secured, have promotional interest rates that cannot be matched or reduced even more. Thus, it makes no sense to try to include them in a debt consolidation program.

To be more specific, the following loans are seldom consolidated: Home loans, home equity loans, home equity lines of credit, refinanced home loans, federal loans for first time home buyers, federal student loans, other government loans, private student loans from non-profit organizations, etc.

Secured loans can only be consolidated by means of a secured consolidation loan. In other words, you have to resort to refinancing in order to reduce the burden from home loans and home equity loans and lines of credit. When it comes to car loans, the problem is the same, an unsecured consolidation loan will never be able to match the low interest rate that car loans provide due to being secured and thus you will need to refinance the car loan if possible or consolidate via a secured consolidation loan guaranteed with another property.

Debt Consolidation

However, do not get confused; debt consolidation loans are not the only form of debt consolidation. Debt consolidation is mainly debt negotiation and sometimes, by means of a debt consolidation loan, all your debt (or most of it) can be reduced to a single loan with a unique and lower monthly payment.

Debt consolidation agencies however, first contact your creditors and agree with them a reduction on your debt by reducing the interest rate you pay and sometimes they can even obtain a cut on your debt's capital. As stated above, by these means you can achieve a debt reduction of up to 70% but most importantly you will be able to make your debt affordable again, thus driving away the risk of defaulting or having to go through a bankruptcy process. After this negotiation deal has ended debt consolidation agencies can provide a debt consolidation loan or not. In most cases, even without a debt consolidation loan, all payments to creditors will be made through the agency.

Debt Consolidation Can Save You

Debt Consolidation Can Save You

by Heather Ale

There are a lot of myths going around about the consolidation loans and whether they are a good thing are not. Many consumers believe that the consolidation loans are just hype from debt management companies trying to make a little money. This is not true. While the debt management companies are there to make money they are not going to sell a product that isn't for your benefit.
Now are there ways that a consolidation loan can hinder your progress on getting out of debt? Yes. So as the consumer of consolidation loans you need to understand what they are about and how they can help you.

First of all with consolidation loans you are trying to save money not only in the moment, but also in the future on the debts you have. It is important to learn how to do this so we are providing an example. Say you have 30,000 pounds on debt. A car loan at 12.95%, a mortgage at 7%, one credit card at 14.99%, a student loan at 6.5%, and a second student loan at 2.5%.

The credit card is the easiest thing to pay off in a short amount of time in most cases, but you have to have the money to do so. Most individuals get stuck with consolidation loans that actually cost them money because they haven't thought about what debts to lump in the loan.

Look at the example you know that in ten years you must pay off the student loans, so why if you get a consolidation loan for 7% would you lump those two loans together? The answer is your wouldn't. It pays to be smart about what you allow in the consolidation loan.

Student Loan and Debt Consolidation Tips

Student Loan and Debt Consolidation Tips

by Jon Arnold

It happens. You get yourself into a seemingly overwhelming load of debt, whether it is from credit cards, from personal financial setbacks, or even from things that you have no direct control over like a job layoff, huge medical expenses, a messy divorce, etc.

And rarely does a student graduate from college these days without a massive amount of student loan bills that now need to be paid back. The good news about student loans is that they are usually at a very reasonable interest rate, but when the student is out looking for a job, finding a place to live, and managing all the other aspects of their life, having that student loan bill looming over their head can cause a lot of stress.

By far, in either situation above, the best and easiest way to get this taken care of is through a debt consolidation loan or a student loan consolidation loan. At its core, what you are really doing is refinancing the debt that you owe. Do not get debt consolidation confused with bankruptcy because they are two entirely different approaches. Bankruptcy should be considered only as your very last resort, since declaring bankruptcy is much more serious than doing so in the game of Monopoly, and it will leave a glaring red flag on your credit report for the next 7 to 10 years.

One big advantage to debt consolidation or student loan consolidation is that it takes a lot of the stress away. Instead of having to pay umpteen different bills each month, you only make ONE payment to the debt consolidation service. With this type of loan, they do not give you a cash loan to do with what you please, but rather they arrange to make your payments for you to each of your creditors or student loan issuers, and as long as you make your monthly payment on time to the debt consolidation company, your bills to your creditors are being taken care of.

Another advantage to this approach is that the monthly amount you spend to make your payments is typically quite a bit lower than what it was before. This gives you some additional financial breathing room to get your financial affairs in order. It also keeps your credit history clean with the credit bureaus, since from their perspective, you are making your payments to them on time every month, which is the absolute best thing you can do to keep your credit score as high as possible.

You need to realize that with a debt consolidation loan or student bill consolidation loan, your debt has not gone away. You still have those financial obligations, so don't think that you can now go on a spending spree. It might even take longer to get the entire debt paid back, but now the stress of stretching your personal budget to the breaking point is no longer there, and you can many times "pay ahead" when your financial situation is better so that the outstanding loans don't take so long to be paid back.

Consider debt consolidation to get those bills taken care of. The future is bright and this can give you the time you need to get your financial situation straightened out without doing serious damage to your credit report and credit score.

Do I qualify for Student Loan Debt Consolidation?

Do I qualify for Student Loan Debt Consolidation?

by John C. Baker

As a student who has taken admission in college for the first time or as parents who are planning to send their child to college, you can't help but cringe, when you have to purchase textbooks worth thousand dollars or when you receive a bill for tuition fees. The rise in expenses associated with college education in United States has led to increase in demand for student loans. This has, in turn, increased the requirement for student loan consolidation services. Students, whether pursuing their studies in a graduate school or studying abroad have accrued huge debts, much beyond, what was considered reasonable, a few years back. Student loans have lower than normal interest rates and very flexible payment terms. This is because these loans are specifically meant for the people who are not employed.

But even with such low interest rates and convenient pay-back terms, many students may find it difficult to pay these loans as per the payment schedule. Student Debt Consolidation programs are customized to assist the students in managing their loans and thereby helping them to avoid defaulting on their debts.

There are debt consolidation agencies which are specially meant to manage debt problems of the students.

Basic Types of Loans Student loans can be classified into federal and private. If you are one of those students who have taken both types of loans it is strongly recommended that you do not consolidate these two loans into one. Out of these two loans, only loans classified as federal can be refinanced as they are backed by the government. You should package all the federal loans into one and solve them before heading for the private loans. Private loans are mostly unsecured in nature therefore they charge interest rate which is higher than federal loans.

Criteria for Consolidation If you would like to go for consolidation of your student loan, you will need to meet certain criteria. Firstly, it is required that either you should be out of the school or college and be in what is defined as the "grace period" of your loan or you must have already started repaying the loan in order to take advantage of student debt consolidation service. When you get in touch with a consolidation agency providing service to students, you must begin by asking them to get in touch with your creditors.

The agency will negotiate with these creditors and convince them to reduce rate of interest as well as your monthly payment. The repayment of your student loan has a direct impact on your prospects of taking loans in future, as is the case in any other type of loan. In case your student loan becomes more than 85% of total monthly income earned by you, it will be assessed as a negative score for any future loans. This emphasizes the importance of timely repayment of your student loan and its effect on your future decisions of borrowing money. Based on their evaluation of your financial position and repayment schedules, some debt consolidation agencies can qualify you for further debt reduction programs. These addition reduction programs assist you in many ways, most important of which is reduction in your interest rates. They also include savings made during grace period, automated direct debit payment and on time payments.

Beware

It is very important to state here that not all consolidation companies are genuine in nature. Therefore, you must apply to the consolidation company which is a famous company with credentials to support. Ignoring this advice may lead to substantial increase in your problems as such illegal companies will lead to higher debts.

Debt Consolidation Is Not Always The Right Solution

Debt Consolidation Is Not Always The Right Solution

by Jessica Peterson

Debt consolidation can save you from debt problems, can improve your credit score and save you thousands of dollars. However, not all debt can be consolidated and given that there are different consolidation programs you should check if the one you chose or the one that the agent chose for you is really to your advantage.

There are many reasons why debt consolidation may not be the right solution for you. Debt consolidation cannot solve debt problems for all kind of debts.

Debt consolidation may be too expensive if debt has already affected your credit and you don't have collateral. And certain debt consolidation programs may be nothing but scams. Thus, you need to be well aware of what you are getting into.

Debt Not To Be Consolidated

For starters, you should understand than not all debt is suitable to be consolidated. The reasons for this are varied. Most subsidized loans already carry very low interest rates and thus, it makes no sense to consolidate those loans by using a more expensive loan. This is always true, unless of course what you need is to reduce the monthly payments by extending the loan repayment period.

There are many subsidized loans. Government loans for students, private loans for students, government loans for first time home buyers, government loans for starting businesses, government loans for research disciplines, etc. are just a few examples of subsidized loans that are not suitable for consolidation.

There are loans that being secured are not suitable for consolidation. Though refinancing can be a form of consolidation if other loans and debt are repaid with the exceeding cash obtained from a cash-out refinance loan, truth is that very seldom a home loan or home equity loan is included in a debt consolidation program.

Debt Suitable For Consolidation

Generally speaking only debt which is unsecured in nature and secured debt taken when your credit score was low (bad credit debt) is suitable for debt consolidation. The latter will be suitable only if your credit score has improved or if you can provide better collateral and thus obtain a more competitive interest rate.

Examples of unsecured debt are: unsecured personal loans and personal lines of credit, credit card debt, store card debt, pay day loans, cash advance loans, certain student debt, bank account overdraw agreements, bank pre-approved personal loans. All of these can be consolidated into a single loan or the terms negotiated by a debt consolidation agent.

Debt consolidation in the form of a loan carries the advantage of obtaining a single and lower monthly payment that will simplify your budget while you work on your expenses. Debt consolidation in the form of negotiation is also an excellent tool that can provide a solution by reducing rates, eliminating debt generated by interests or extending the repayment programs so as to make debt more affordable.

And finally, both methods can be combined offering an excellent way of eliminating debt, managing finances and improving credit score in the same debt consolidation program.