How much is your debt costing?
If you are managing multiple debts, you may be struggling with a combination of high interest rates and high repayment rates. This can mean that you are faced with high repayment costs, and that your funds are tied up in repaying debt without getting rid of it.
Can you keep track of your debt?
Keeping track of debt across different sources, such as credit cards, overdrafts and loans, can require payments of different amounts to be made on different dates. It may be hard to keep on top of what needs to be paid and when, which can lead to missed payments and subsequent penalty charges. If you are more than 30 days late making a payment, your credit record may also be impacted.
How can debt consolidation help?
Consolidating your debt into one personal loan gives you a clear idea of how much money you owe and the cost of repaying it. You can set up one repayment amount that suits your budget, and make payments as regularly as you can afford. This allows you to manage your budget while also helping you avoid getting into further debt in the future. On a fixed rate loan, your interest rate will be set upfront so you don’t have to worry about fluctuating costs and repayment levels.
One of the risks of debt consolidation is the temptation to start accumulating new debt on credit cards and other facilities that you have just cleared. If you choose to consolidate your debt into a personal loan, it’s important to build a budget that is realistic for your living expenses, and to avoid getting into further debt.
Setting a budget will enable you to understand your costs and income, and you can then plan to save for future expenses. Take a close look at credit cards and overdrafts and consider closing or removing them to avoid the temptation of increasing your debt.
Are you ready to apply?
If you’re ready to apply for a personal loan for debt consolidation, give AA Finance a call. Our Personal Loans team can help you structure a loan that works for you, and you can look forward to getting your finances back on track.
Disclaimer: Please note that the content provided in this article is intended as an overview and as general information only. While care is taken to ensure the content is correct, the information provided is subject to continuous change. Please use your discretion and seek independent guidance before making any decisions based on the information provided in this article.