Over 10 million people in South Africa alone are experiencing bad debts due to reckless and excessive spending. Everyday people are bombarded with specials whether it be the latest smartphone on the market, or the latest fashion and through their credit card purchases or loans taken out they end up burying themselves in debts they cannot afford to repay back. This is where Debt Consolidation Loans can come to your rescue.
What is Debt Consolidation? The answer is very simple – it is a facility that allows you to take out one larger loan which you will then use to pay out all your existing smaller loans and remain with one loan and one repayment obligation. Debt Consolidation Loans are paid to your creditors and is usually provided by a Debt Counsellor.
Loan Consolidation is beneficial because it allows you to benefit from lower monthly interest rates and easy debt management because you will be dealing with one loan only. There are various financial institution that provide Debt Consolidation Loans and they include African Bank, Old Mutual, Capitec Bank, FNB Bank, ABSA Bank, Nedbank, Standard Bank and other smaller micro-finance lenders.
Another option for individuals who are in debt is Debt Counselling which helps you rearrange and review your repayments and allow you to pay them in order of importance. A Debt Counsellor can devise a debt reconstruction plan when they see that you cannot afford to meet your monthly debt and they can make a proposal to the Magistrate Court to have your debt rearranged.
Having Debt Consolidation Loans doesn’t mean that all your expenses will stop but rather they will require some form of discipline from you when it comes to reckless spending. Unless you manage your spending the cycle can restart all over again and before you know it you are back in debt. It is crucial to learn to live within your means and make adjustments in certain areas such as cutting down of wants and sticking to needs. Needs can include things like accommodation, food, school fees while wants are things like buying gadgets, spending money on entertainment and so on.