Chances are you've got debt, but that's not necessarily the end of the world. We've all taken out loans at some point or another, but what's important is how you manage and repay your debt. Debt management can be difficult, or it can be made easy through options like refinancing and consolidation. Read more about debt consolidation at the Money Advice Service. Here are a few reasons why you should consider it.
1. Make Debt Easier To Afford
One of the major problems you will encounter when you've got multiple loans is that your monthly instalments can become extremely expensive. Just think about it - all those payments that need to be made within the same month, and even within a few days of each other sometimes? It gets financially exhausting. Luckily, there is a way to make things easier for you.
A successful refinancing with the aim to consolidate your loans can have extremely positive results for your affordability. Instead of paying all these loans separately, you only pay one instalment and you get to renegotiate the amount that goes out every month.
2. Make Debt Easier To Manage
Let me guess - every month, you're running around paying different instalments to a series of lenders. With so many loans, there are a lot of details to remember, like the amount you borrowed, the amount you've paid, how much you have let to repay, how many instalments, what amount you're supposed to pay for each instalment, on what date, what the interest rate is like, etc. It's no wonder you're getting confused, and possibly missing payments.
A solution for this issue is to just consolidate your debt. That will effectively achieve a streamlining effect; instead of having several loans in different places, you only need to worry about one. All of your debt, in one single place, easy to remember and repay. This way, you will never forget about your repayment instalments again and it will be much easier to keep track of.
3. Get A Better Deal On Your Loans
The other major advantage people enjoy when getting consolidation loans is that you can renegotiate the terms of your loan. That means that you may be able to reduce the total amount you repay, change the amount you pay every month to make it more affordable for your budget, or change the total repayment period.
And don't forget about the interest rate - that can be the one that pushes your loan into something that's unaffordable for you. With a refinancing, however, you can opt to renegotiate - and maybe successfully reduce - your interest rate. It doesn't make sense to consolidate if your interest rate will be higher, does it? But if you can get a better deal on loan repayment, why wouldn't you?
4. Pay Off Debt Faster
When you're up to your neck in loans and paying diligently every single month for years and years, it can feel like you're never going to be done with them. Especially if you've since improved your financial situation and can afford to pay more, it's worth trying to get rid of debt faster, right? Reclaim your financial independence and your credit!
You can do that easily with a debt consolidation loan. Renegotiate your terms and make sure that you are set to repay your loan quicker. That can be achieved by reducing some of your total debt, or by agreeing to pay a higher amount per month, maybe in exchange for reducing your interest rate. Win-win! Be sure to consult a debt consolidation calculator first, like the one provided by Step Change.
All in all, refinancing and debt consolidation can be very valuable tools for debt management. If you have multiple loans and you feel like they're getting out of control, consider opting for a refinancing and streamlining your loans for more efficient debt management.