2. Is Debt Consolidation For You?
If your debt is overwhelming, then you may be considering a debt consolidation loan.
It is better to be in control of one debt rather than trying to cope with multiple debts.
You will definitely improve your monthly cash flow and save on interest which may
give you the breathing space you were looking for. If used properly you can save
thousands of rands in interest. So, definitely debt consolidation is a great idea.
However, any great, popular idea could absorb bad things. We will just briefly discuss
some factors you need to keep in mind when considering debt consolidation.
http://www.globalproperty.co.za
3. Is Debt Consolidation For You?
Your Rate Of Interest
Be sure to shop around to get the best interest rate you possibly can if you decide on a
debt consolidation option. The interest rate you end up paying will have an impact on
you and your families’ financial future, so do your homework before you sign on the
dotted line.
Don't be an advertising victim by any offers that only give you a fair rate for a limited
time, because the chances are good you're going to possess this loan for quite a time.
If you have a number of credit and retail cards and you have been unable to transfer
the balances to reduce your interest rate substantially, then debt consolidation may be
the solution.
http://www.globalproperty.co.za
4. Is Debt Consolidation For You?
Lower Payments vs Lower Costs
As with any loan, the devil is in the details. If borrowers can secure a low-rate, low-
cost loan and pay their debt off faster than they might otherwise, then debt
consolidation can make sense.
Too often, however, consumers look for lower payments, rather than lower costs.
Lower payments usually mean it will take you longer to pay off your debt, and they
inflate the total amount you ultimately pay.
Many people compound the problem by continuing to run up credit-card balances
after they have consolidated their old debt.
http://www.globalproperty.co.za
5. Is Debt Consolidation For You?
Your Loan Term
If you consolidate your debt into your mortgage, you must not capitalize it over a 20
year term for example. In order for this to be beneficial, you have to repay the loan
over the short term.
Debt Consolidation Psychology – Beware Of Plastic
So many people after they have consolidated their debt, starts to think that there
problems are over. They have so much more cash left over than previously and they
feel great! Now surely you can afford a few extra cards?
http://www.globalproperty.co.za
6. Is Debt Consolidation For You?
Do not fall into this mental trap. Consolidating your debt and then accumulating even
more debt is a very bad idea. Remember, your Home Is At Risk. This is the biggest risk
when you take on any major loan. Almost without exception, the loan will be secured
against your house.
If you do consolidate your debt, it is advisable to use a large chunk of the extra cash
you now have and work towards paying off your bond. This is the best tax free
investment you could make.
http://www.globalproperty.co.za
