Debt Consolidation Loan
Debt consolidation loans are when all your debts are rolled into one loan so you only have to make one regular repayment. Your eligibility for a debt consolidation loan will depend on your income and credit rating. A debt consolidation loan may even have lower interest rates which could save you money!
When considering a debt consolidation loan make sure you understand the terms and conditions of the new loan as well as the ones you’re hoping to pay off as fees and charges may apply for early repayment.
Traditionally, offered by banks, finance companies and credit unions, Money Sweetspot is a debt consolidation loan provider in New Zealand. Designed for New Zealanders who are already working hard on their finances, Money Sweetspot debt consolidation loans have less fees, you can earn rewards that can go towards paying off your loan, and their interest rates are potentially lower.
How does a debt consolidation loan work?
You take out a loan with one provider for the purpose of paying off all of the other providers or creditors that you owe money to, so that you end up with just one repayment.
Some things you need to be aware of are:
although the new repayment is quite often less, the loan repayments will generally be for a longer period, which means you may end up paying more than you would have done originally;
you may pay higher interest rates than those associated with your original debts. Interest and fees may increase the amount you owe in total;
sometimes a debt consolidation loan may need to be secured against some of your property, and therefore if you default on payments, you may be at risk of losing that item.
Who can benefit from a debt consolidation loan?
Debt consolidation loans are not the right solution for everyone, but you may be a suitable candidate if you have a stable job with a steady and consistent stream of income and have a good credit rating.
