Many of us know how shockingly easy it can be to get caught up in the cycle of debt. These days, it can be all too simple to lose track of expenses, especially when juggling several high-interest credit cards, store cards and personal loans.
The worst thing about all of these debts is that their repayments eat away at your salary, but offer very little reduction to the debt itself! Without an effective plan, it can feel like the stresses of having multiple debts is piling up, and there is no clear end in sight.
Debt consolidation offers a smart, convenient solution for getting on top of your debts. In this post, we’ll explore the ins and outs of debt consolidation and how it can help you end the stressful cycle of bad debt — once and for all.
What exactly is debt consolidation?
First things first — what is debt consolidation? Simply put, it's the process of integrating all of your debts or loans into one simple, easy-to-manage loan. Among other things, this means that you only need to deal with one set of interest rates, fees and repayments, instead of multiple. Debt consolidation offers an extremely effective way to regain control of your payments — allowing you to concentrate your efforts on reducing your overall debt levels.
How a debt consolidation loan works
Once you’ve applied and been approved for a debt consolidation loan, your loan provider usually pays out all of your existing loans to their respective lenders. You’ll then be set up with your new loan, with a clear repayment schedule as well as a pay deduction form to allow automatic repayments from your employer each pay cycle. A good loan provider should also give you the option to become debt-free sooner by repaying your loan earlier than the scheduled end date.
What types of debt can a debt consolidation loan help with?
By amalgamating your existing debts into one, easy-to-manage loan, a debt consolidation loan can help you quickly get on top of your debts. You can consolidate all sorts of unsecured loans (loans that are given without any form of collateral), including personal loans, credit cards, store credit cards, payday loans and even medical debts.
These are often considered “bad debts” because they are used purely for consumption and not to increase wealth. This is why combining them into one loan — with one transparent and competitive interest rate — can be a crucial first step to getting out of debt once and for all.
Who can get approved for a debt consolidation loan?
There are specific criteria that need to be met in order to be eligible for a debt consolidation loan. Generally speaking, you will need to:
Be 18 years of age or over
Have received regular income for the past 90 days or more
Be an Australian citizen or a permanent resident
Have direct contact details, including phone and email
Have access to online banking
When applying, you’ll also need to meet identification requirements, provide current bank statements and payslips, and answer a few questions about yourself and your current financial situation. Approval for loans is generally given within 1-2 business days.
Using debt consolidation to get on top of debts fast
With some simple planning, you can use your debt consolidation loan to help you get on top of — and out of — debt cleverly and quickly. Once you’ve consolidated your various debts into one loan, here are a few steps to get ahead of your debts:
Create a simple budget showing your income and expenses (including outstanding debts).
Detail both the minimum repayment amount and timeframe required to pay off the debt. Make sure that the amount and timeframe you choose is manageable and won’t impede too much on your current lifestyle.
Commit to your budget and plan, and watch your debt reduce bit by bit.
Using debt consolidation to get out of the debt spiral
As we know, it can be all too easy to get caught in a spiral of bad debt. We are naturally drawn to what we think are “good deals” or “special offers”, especially when these deals or offers allow us to get the things that we want! Unfortunately, over time and when multiplied, these things often turn into unmanageable debts.
A debt consolidation loan will help you get out of this harrowing spiral of debt, and give you back a sense of financial freedom by:
Giving you one manageable repayment each month.
Saving you money on high credit interest rates.
Allowing you an effective strategy for getting out of debt sooner.
Over the years, debt consolidation has helped many Australians regain a sense of financial freedom and control over their financial futures.
Choosing the best debt consolidation loan for your needs
Are you looking for the best way to consolidate debt to help gain control over your future? When looking for a debt consolidation loan, it’s crucial you look for a provider who not only offers a great range of loan features but is invested in helping you minimise debt long-term, and hence create a solid and secure financial future for you and your family.
Salt & Lime — making debt consolidation simple
At Salt & Lime, we know how debilitating the debt cycle can be. Without a clear plan of action, debt can soon spiral out of control, causing hardship and stress for those in its grip. We’re committed to helping people get on top of their debts, fast.
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