What are the benefits of obtaining an easy personal loan in order to consolidate my debt?
Easy personal loans are often taken out for debt consolidation purposes. This means that the loan money will be used to pay off a series of smaller loans. One benefit of taking out the larger loan would be to get a lower overall interest rate. The majority of debt consolidation loans are taken out for the purposes of replacing a high-interest short-term loan. This could be credit card balances and/or money owed on retail store cards. Borrowers can get easy personal loans that can be repaid over a longer period of time at more favorable rate of interest.
You are probably wondering what type of financial situation merits taking out a larger loan for the purposes of consolidating debt. Here’s a fairly realistic example of someone’s debts:
This individual is making monthly payments of more than R10 500 on these debts, which are all carrying a high interest rate.
In applying for an easy personal loan, you would be getting another home loan advance. Those funds will pay down or even pay off all your other smaller loans. This will leave you with just one payment every month, which would be on your home mortgage of R795 000.
Are there any risks to taking out an easy personal loan if I’m going to use it for debt consolidation?
On the surface it seems like getting a personal loan in order to consolidate your debts would be the perfect solution, but there are certain risks. The benefit is that you would save money on interest. However it’s going to take you much longer to pay everything off. The bills you would have paid off in maybe three to five years will now take you 20 years to repay. In the long run the money you pay in interest will be much more. The reality is that you might end up paying on your car long after you’ve already sold it.
To mitigate this situation, you might want to pay more each month towards your bond so that you can pay it off early. What you would do is apply online for your easy personal loan in order to consolidate your debt. When you get the funds, repay all those smaller loans. Then pay the same amount every month that you were previously paying, but towards your bond. This way you can fully pay your mortgage off in less than 10 years, which will save you a fortune in interest.
In general, it would be best if you didn’t have to take out a large loan to consolidate your debt. However, if you are in a financial pinch that may force you to actually default on a loan, this may be your best option. Obtaining an easy personal loan for debt consolidation purposes can be very advantageous, especially when you are at risk of being served with a substantial judgment.