How to tell if debt consolidation is right for you

It’s worrying if you are just scraping by to meet repayments on debt. Each month you wonder whether you’ll be able to afford them, talk less of paying for the basics such as eating, rent or the mortgage, utility bills and everything else that swallows your wage packet.

It can also be a huge concern if you know any emergency costs could tip the balance towards disaster zone.

The thought of consolidating your debt with the hope of lower repayments is definitely worth considering if you are at this stage. Although, it’s not in every situation, this is the right path to take. Here’s how you can tell if it’s right to you.

You no longer have any credit accounts
Debt consolidation only works if there is a commitment not to rack up the debt again. Often times, people consolidate their debt but continue to use their credit cards to make purchases. Once things are easier financially, they quickly forget the reason they needed debt consolidation.

If you have called up the credit card companies and closed your accounts there’s no chance you’ll be spending on them again. Debt consolidation is really going to help you get back on track if you have decided not to use credit cards, more loans and overdrafts again.

You’ve addressed the root cause of your debts.
There’s a million and one reasons people fall into debt.

Some people are financially strapped and start using their cards to pay for everyday things like grocery shopping, new clothes for the kids, repairs to cars or the house. Some people have habits such as gambling or, overspending on items they can’t really afford. Most of the time, people do not have a a good handle on what money is coming in and what is going out. Many people choose to ignore it.

Once you admit to the root cause of your debt, you may realise all you need to do is to change your spending habits. Spend less, budget more and work hard to improve your financial situation. It might take time but in the end when you’ve learnt to manage your money you’ll have peace of mind.

If on the other hand you do have a good budget system in place and have learnt to curb your spending, debt consolidation may be a good option. You know what you are spending, you’ve cut back on the unnecessary purchases and you are truly seeking the path to financial stability.

You understand the implications of debt consolidation
Don’t forget debt consolidation, is just another loan you will take out to make your existing debt more manageable. Consolidating debt into one single payment will help you budget easier.

Your overall aim with debt consolidation should be to reduce the interest rate you currently pay on the repayments. Be aware of the interest you are paying and make sure your new loan has a preferable rate.

It is best you make sure the term you take on the consolidation loan is not going to mean you end up paying more. Stretching your borrowing over 10, 15, 25 years can mean the actual cost exceeds what you are already paying. Definitely not worth it.

Understand the true cost of your new loan. Or, consider taking out a short term loan.

If you are considering talking to someone about consolidating your debt using short term loans, call us on 0203 302 4020 . Alternatively begin your online application for a short term loan and Get an Instant Quote today.