What is Debt Consolidation & Why Consider It?

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Alternate Finance makes it easier than ever before for New Zealanders to consolidate their debt. We’ll help you simplify your loans and even reduce your weekly payments. It’s exactly what many Kiwi families need during hard times. If you’ve heard of debt consolidation but you’re not quite sure what it is, you are not alone.

Debt consolidation is put into the too hard basket for many New Zealand families because they aren’t sure what it is, or how to make money work better for them, so in this article, Alternate Finance is helping by explaining exactly what a debt consolidation loan is, and how it can help you get out of debt.

What is Debt Consolidation?

First things first, what is debt consolidation? Many people in New Zealand have credit cards, hire purchases and other debts with multiple loan companies. Debt consolidation is the process of taking all these separate debts and turning them into one easy payment.

Juggling multiple personal loan payments with New Zealand loan companies causes a tremendous amount of stress for many people so Alternate Finance simplifies your finances. It will be a relief for you to consolidate these and just make one regular payment at a lower payment amount than what you’re currently paying at the moment.

Why Consolidate Your Debt?

One reason why you may want to consider a debt consolidation loan is that you will no longer be paying multiple sets of interest. By having many loan companies charging you interest on separate loans, you can end up paying more overall than having just one personal loan.

By consolidating your loans into one, you can make just one regular payment, whether it’s weekly, fortnightly, or monthly. This can offer you massive savings on interest as you’ll only be paying interest on a single loan. It lets you get out of debt faster.

Is it a good idea to consolidate your debt? Let’s go through the benefits:

  • Many debt consolidation loans have a lower interest rate
  • You may be able to pay a smaller amount each month compared to paying many loans
  • Budgeting is simplified with only one personal loan
  • Get rid of your debt
  • Provides a way to catch up on your bills

Many people ask, ‘is It better to get a debt consolidation loan or a personal loan?’. By getting one personal loan that wraps up all your debt into one, you can save yourself money and budgeting headaches. Rather than keep getting additional personal loans, you’ll love the convenience of a debt consolidation loan.

How Do You Know If You Need Debt Consolidation?

Many people are in debt but aren’t sure if they require debt consolidation. So, under which circumstances should you consider it?

You might need it if:

  • You struggle to meet your minimum payments on your loans
  • You would find it easier to make just one payment
  • You find it hard to borrow because of your credit history
  • You have numerous debts and struggle to keep track of it all

Does Debt Consolidation Affect Your Credit Score?

While debt consolidation may indeed affect your credit score, it’s not all bad. In the short term, by taking out another loan, your credit score will be affected in a minimal way. However, in the long term, it is the best thing to do because you will pay back your other debts, raising your rating again.

You will also likely pay less in interest over the term of your loan, making paying back debt more manageable. So, because debt consolidation helps you get out of debt, it is better for your score overall. That’s why a debt consolidation loan is the smartest way to consolidate debt.

How to Get Out of Debt Faster

The ultimate thing about a debt consolidation loan is that it can help you get out of debt faster. Countless New Zealand residents have turned to Alternate Finance when they weren’t sure how they were going to handle all their credit card and HP payments. We have helped them get back on their feet by simplifying their debts. You too can get debt-free much quicker with our low-interest rates.

People choose us because:

  • We see past your credit rating. Instead of only credit score or income, we assess your security and ability to pay back a loan. As long as we think you can pay it back, you can borrow from us regardless of credit rating.
  • We simplify your finances. Why pay several debts when you could just pay one? We also offer flexible payment options to suit you.
  • Our Friendly Team. If you’re in a difficult situation, our team are experts in helping you manage your finances. We’re only a phone call away, but first, you need to start with an online application.

Our team is here to help you with creative and flexible solutions to pay off your debts faster. They understand that for many people in Christchurch, Wellington, or where ever you live in NZ, in getting unexpected bills and expenses can knock you back. Contact our customer care team to discuss your situation.

You can apply for your debt consolidation loan from Alternate Finance today and get back on top of your finances.

Tom