Frequently Asked Questions For Debt Consolidation Loans
No one is a stranger to debt, and this is something every Aussie on square metre can confirm. This is especially true when it comes to debt consolidation loans since more and more people are applying for them. However, when you apply for something, you ask many questions. Here are some of the questions that lenders and advisers keep getting from those who want to take such a loan.
What is a Debt Consolidation Loan?
Debt consolidation is pretty much like every other loan – only that you use it to pay the debts that you already have. For instance, if you have three loans, you can use this loan to pay off the other three, so that you will no longer be juggling three different loans.
What is the Difference between a Secured and an Unsecured Debt Consolidation Loan?
A secured debt consolidation loan will take collateral property such as a car, a house, or any other asset you may have to ensure that you will pay back the loan eventually, at a lower interest rate. Unsecured debt consolidation loans, however, are loans that do not need collateral but are given at a much higher interest rate.
Do I need to own a Property to take out a Debt Consolidation Loan?
No, it is not necessary for you to be a homeowner to take a debt consolidation loan. If you don’t want to borrow against an asset, you can simply take out an unsecured loan. However, since the interest rates are higher with this one, you may want to know the full details of the payment plan.
Will I be charged any Fees for taking out a Debt Consolidation Loan?
The sum paid will differ from one company to another, but normally, yes, you will be charged several fees when you take out a debt consolidation loan. They may be closing costs, start up-fees, or any type of tax – which is why you may want to do a careful reading of the payment clauses.
Will Debt Consolidation Loans be of any use if I had Late Payments?
Yes, if you missed payments on your last loan, you may pay them off using this debt consolidation loan. It will virtually “clean your slate,” help you pay off what you owe, and allow you to remain up-to-date with your payments.
Will a Debt Consolidation Plan bring harm to my Credit Rating?
Taking out a debt consolidation loan won’t hurt your score in any significant way because you are basically paying off everything you owe. Indeed, when you start consolidating your debts (either taking out a loan or going for a consolidation company), your score will go through a temporary drop; however, once you start paying everything off, that credit rating will eventually go up again.
Can I Choose which Debts I want to Consolidate?
Yes, you are allowed to choose the debts that you want consolidated. You can opt for consolidating all of your debts, or you may leave some of them out – whichever you want.
How can Debt Consolidation Loans help with my Payments?
Well, for one, if you get a debt consolidation loan, it helps you by putting all of your payments in one place – so you will no longer have to lose time and go to different banks and lenders. Since it will all be in the same place, it should be done very quickly.
Secondly, it will help you in the matter of interest. If you have multiple loans, you also have various interest rates that you have to pay off. Cumulated, that will cost you a lot in the long run. While debt consolidation loans may have a higher interest rate, it will still be more convenient when compared to having multiple ones. Even 1% will help you save money, especially if you have a long payment plan ahead of you.
How long will it take for me to pay off my Debts?
The duration of your debt consolidation plan will depend on several factors. First is the amount of money that you have to pay; the more you owe, the more time it will likely take to pay. Secondly, it will also depend on how much you can put aside every month for the loan. The more you can afford, the faster you’ll be able to pay off your debt.
The average of every loan payment is four years (not including mortgages, which take longer), but you can settle for anywhere between two to four years, depending on the company that you are applying for.
If you are looking for debt consolidation loans, contact NSW Mortgae Corp for some advice. They have some flexible loan offers that are suitable for everyone, regardless of the state of their credit.