Debt consolidation involves taking out one large debt to pay out several smaller debts, which would then be closed. Well advertised options for debt consolidation include unsecured personal loans.
This is where you have several short-term, high-interest debts (e.g. credit card debts, payday loans and overdue bills) that are combined into one loan. By taking out an unsecured personal loan you benefit from a lower interest rate and the convenience of one payment.
For example, Helen has three separate credit card debts totalling $9,000.00. Each card carries a different interest rate, and each payment is due at a different time. This makes it very difficult for her to keep track of her finances and ensure that repayments are paid on time.
She is charged an average interest rate of 19% per year, and has already repaid more than the value of the original debt. Deciding that enough is enough, Helen applies for a debt consolidation loan. She uses the money from the loan to pay off her credit debt. Helen now has a loan for $9,000.00 over 7 years, with an interest rate of 15.45% per year. Her monthly repayment has only gone down $4.00, but at least she will be debt-free in 7 years.
|Debt Type||Balance||Repayment||Interest Rate|
|Credit Card 1||Balance$3,000.00||Repayment$60.00||Interest Rate19.00%|
|Credit Card 2||Balance$2,000.00||Repayment$40.00||Interest Rate17.00%|
|Credit Card 3||Balance$4,000.00||Repayment$80.00||Interest Rate21.00%|
|Debt Consolidation Loan||Balance$9,000.00||Repayment$175.95||Interest Rate15.45%|
Our debt solutions don’t include you needing to take out new loans. While debt consolidation loans are well-advertised options, they work like any other unsecured debt.
You might feel overwhelmed with your level of debt, but you do have options. Because we are not a lender, we can assess the suitability of several debt solutions if you are experiencing difficulty with your debts. We will work through your budget and if need be, can refer you to a financial counsellor.
If you have more than $8,000 in unsecured debt we may present you with some options available to you. Which may include:
Use our debt consolidation calculator below see how much you could save by consolidating all your existing debts into a single monthly repayment. You can also see how many years it will be until you are debt free based on different repayment levels and interest rates.
Firstly, we will consider whether consolidating your debt is the right solution for you. It can give you the chance to combine your debts into one affordable repayment that is easier to manage. But a standard debt consolidation loan will still see you paying considerable interest on your debt.
You can reduce high-interest loans such as credit cards and unsecured debts into a more affordable option by freezing interest and fees with our debt solutions. Saving you hundreds, if not thousands, per year in interest alone.
Working your way through the options available regarding your debt situation can be overwhelming. Our experienced and understanding consultants can help get clarity on your options.
Generally speaking, unsecured debts can be consolidated.
Unsecured debt is any type of debt that is not secured to an asset like a car or a house. This includes debts on some personal loans, tax bills and credit cards. Your house and car are likely to have security against them.
Fees change depending on the option and the level of debt. We guarantee you will pay less, including all fees and charges with Beyond Debt than you will if you continued repaying under your current situation. Have a chat with one of our Debt Consultants and they will calculate what your total payments will be, including all fees and charges.