Factors to Remember When Getting a Debt Relief Loan to Repay Multiple Debts

factors get debt relief loan repay multiple debts

Debt consolidation or refinancing options are among the best solutions if you are facing financial struggles. Combining several amounts that you owe to different lenders into one single new loan makes your future payments seamless. 

Usually, these loans come with affordable low debt relief loan interest rates and are very easy to apply for. But, before you choose a consolidated debt loan to repay your multiple debts, consider these things: 

Choose A Personal Loan 

When you try to convert your current financial obligations into a new loan, look for personalised solutions. Traditional loan types may require you to show an asset as security. The bank can repossess it and recover the losses if you fail to repay the borrowed amount. 

In such cases, a personal loan is the most suitable option. These are unsecured loans that need no collateral and have almost a 100% approval rate. 

Any Australian citizen or PR, aged over 18, holding a steady job and regular income, can qualify for one such loan. All that one needs to do is maintain an average to excellent credit score. Furthermore, you can receive an outcome within a few hours after submitting the loan application. 

Seek A Reasonable Amount 

Personal loans taken out for debt consolidation should reduce your financial burdens but not add to them. So, in addition to the debt relief loan interest rates, you should also take the amount into account. 

You can clear all your debts or some of them, based on your convenience. Typically, personal loan limits are from $2,100-$30,000 from the top-rated banks in the country. Depending on the loan amount, your interest rate can change. 

Other factors that can impact the rates are: 

● Credit score 
● Loan term 
● How frequently will you repay the interest 

Keep your current financial circumstances in mind and choose the best deal possible. You can take the help of the online loan calculator on the lender’s website to get indicative rates. Change the fields mentioned above and compare the best rate with the rates of your existing loans. 

Tip: Choosing an extended loan period can reduce the monthly repayment amount. Use the savings to pay off the new loan earlier, without any additional fee. 

Improve Your Credit Rating 

No matter the stage you are in and the debt situation, it is an excellent idea to improve your credit score. Lenders perform a hard credit check after you submit your personal loan application. If there are any missed or late payments and penalties in the past, they show up on the credit report. 

Lenders can consider these red flags and possibly decline the loan. So, be consistent in your payments and check your credit report from reputed agencies. 

Plan Your Finances 

Before going for debt consolidation, make a thorough list of all the loans you have. You will know what amount to borrow and which of the existing debts you can pay off on your own. It is advisable to combine the amounts you owe that have higher rates and more prolonged duration left. 

Next, list out the expenses, such as bills, insurance, rent, gym membership, etc., which are ongoing. When you have the cost of living, you can figure out the best repayment schedule. 

Finally, get your income-rated documents in order. They should include the employment history, payslips, tax returns, etc. With these steps, the debt consolidation process can be pretty straightforward. 

Don’t Believe Fake Claims Made By Sketchy Providers 

Some providers that offer refinancing services may guarantee your loan, provided you pay in advance. Others may claim zero additional charges but have a hidden agenda. Don’t fall for such tactics, but only trust reputable sources. 

Check the bank’s licence, overall rating from comparison sites, and user reviews. It is even better if the financial services company you look into has received awards and recognitions.

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