What Is A Debt Consolidation Loan?
A debt consolidation loan is where a lender takes multiple sources of debt including credit cards, and puts them all together in one easy to manage loan. By having one single loan over a longer period, instead of multiple short term loans, you can make your loan repayments more affordable.
When you have multiple loans, credit cards or repayments to keep track of it can be easy to miss a payment and rack up fees. It can also be a nightmare to keep track of all the different interest rates and fees which vary from loan to loan.
Consolidating your debt into one easy Debt Consolidation Loan simplifies your finances and ensures you’re set up for repayment success.
How Do Debt Consolidation Loans Work?
When you take out a Debt Consolidation Loan all your pre-existing debts are paid off in full and then simplified into one monthly payment. This helps you pay your debt off faster and reduce financial stress.
We even time your loan payments with the day you get paid so you’re less likely to miss your monthly repayments.
Make sure you’re not paying more than you need too. Try our Debt Consolidation Calculator to work out how much you could potentially save with a Debt Consolidation Loan.
How Can I Improve My Credit Score?
The good thing about credit scores is that they’re constantly changing. After five years, most information is cleared. So if you were going through a rough patch five years ago, and were consistently late paying your power bill, chances are it will no longer show on your credit report. By setting yourself up for repayment success with a debt consolidation loan, you can improve your credit score.
Paying off your existing debts is the first step to improving your credit score. With a Debt Consolidation Loan you can achieve this faster and potentially save on fees.
Don’t Miss Any Payments
The best way to improve your bad credit history is to pay your bills on time (before they are due is the best way to avoid late payments) and keep your credit card balance low. A Debt Consolidation Loan will help you to ensure your existing debts are paid on time with one regular repayment. It’s also important to ensure any future utility, gas, internet and rent payments are paid on time too.
Cancel Your Credit Cards
If you own multiple credit cards, every credit card you own can negatively impact your credit score. When you take out a Debt Consolidation Loan, your credit card debt is paid off in full so all your credit cards will have a balance of zero. This is the perfect time for you to retire your credit cards and reduce your credit limit. It’s fine to keep one credit card for unexpected expenses, just ensure you only spend what you can afford to pay back in monthly costs to avoid paying interest.
Start An Emergency Fund
Having a savings account specifically for emergencies means you can be financially prepared if unexpected expenses arise. This ensures you’re less likely to rely on credit cards or loans in the future. You could potentially use the money you save by consolidating debts to build up some savings.
We also recommend the following online resources:
Sorted: Budgeting Tool
Sorted: How Credit History and Scores Work
Consumer Protection: How credit scores work, the impact of bad credit, and how to improve your score
GET THE BEST Debt Consolidation LOAN FOR YOU
With Loansmart we look at your entire lending situation, to try and find a better deal for you. If you’re concerned you may be paying too much on your current loans, apply for a Debt Consolidation Loan online or talk to us today on 0800 255 155.
We can help you achieve your goals more affordably.
Don't Pay More Than You Need
Loansmart has been helping New Zealanders with their Debt Consolidation needs since 2008. Our clients love what we do, and we love helping them too.
- Get a Debt Consolidation repayment plan that works for you
- Set yourself up for repayment success, not failure!
With only one payment to make each time that you’re paid, budgeting is easier and you can save on fees and interest rates.
- Take control of your debt with one easy payment
- Pay off all overdue bills
- Lower your fees and interest rates