If you have many debts that you are paying off every month and it has not been easy on you considering your income. Merging your debt might be an ideal option for you, as it can help you with all your bills regardless of the type. It is helpful in so many ways, hence the name consolidation loan. This type of loan usually takes out all of your credit cards and uses them as security or collateral. Upon making your first payment, you will definitely get a loan for this amount and the card companies will get their full payment. When you make the next payment, they will also get their full payment.
There are a good number of companies that offer debt consolidation loans in Ghana. Therefore, continue reading to find out the right company to merge your debt with.
What is a Debt Consolidation Loan?
This is simply a way to put all of your debts, no matter the amount into one payment and make it easier for you to pay them off. Debt consolidation loans save you a lot of time because all your payments go towards one large payment. It does not spread across several creditors, making it difficult for payment.
In addition, we can regard debt consolidation loans as taking out a new loan. Hence, to repay several consumer debts, liabilities especially unsecured ones. Meanwhile, they join multiple debts into a single but larger piece of debt. They do this in a pay-off terms that the customer can afford with a lower interest rate or lower monthly payment. Consumers usually use debt consolidation as an ideal tool for credit card debt, car loan debt, student loan debt, and other types of debt.
What is the interest on debt consolidation loans?
Debt consolidation loans usually come with very low interest rates. Hence, the reason many Ghanaians merge their debts. With the money that you make, you can always merge this loan and get lower interest rates. If you have a cosigner, they can also use the influence to lower their rates.
Things to consider before going for debt consolidation loan
When considering a debt consolidation loan in Ghana, you need to shop around and get several quotes. It is important that you note the best option for you and not just choose because of the lowest rate. This is because rates could change along the line and it could make no difference at all in the end.
A good debt consolidation company should be the first consideration when looking for the best way to merge your debt. As this makes it easier for you to pay it off. You can find companies that offer this service in Ghana online, also by calling several of them to make enquiries.
Also, note that consolidation loans usually help you pay off your current debt while finding a new debt. Hence, the more times you pay off your credit cards, the more money you will have left over for other needs. So, it can be a great way you can start over until you get back on track financially.
Uses of Debt Consolidation loan
When looking for debt consolidation loans, always remember that this is something you do on your own.however, a debt consolidation loan can help you pay all your bills while you move on with your life. There are several ways that you can merge your debt, but it is always best to check with a professional first to find out which is the best one for you.
We use debt consolidation loans for two major reasons
1) To make an individual’s collective debt less costly. A debt consolidation loan can only help you save money if you are using it to cover more expensive loans. Especially loans which will become very costly if you don’t pay off quickly. Hence, the debt consolidation loan in this case will save your money if you do not pay off as quickly as possible.
2) To break down or bring down monthly instalments
This is the major reason that people take out debt consolidation loans. They usually want to make minimum payments. However, they have to restructure their debts with a consolidation loan to stretch out the payments to make it easier. This reduces monthly instalments while increasing the overall cost of the debt.
Is debt consolidation loan an excellent choice?
If you are keen to live a debt-free life soon, then applying for debt consolidation in Ghana is a brilliant choice. However, you can only do this if they commit you to living debt-free.
Note: Your debt repayment will be high and always ensure that you can afford it before applying for it. A financial adviser will guide you in making the correct choice that’s perfect for you.
Important things to note before applying for debt consolidation loan
Before you decide to apply for debt consolidation, it is important to note:
Credit score: This usually affects the outcome of your debt consolidation application. It also decides whether you can afford the newly proposed repayments by the consolidation company. Having a good credit score can reduce the interest rate on your consolidation loan. Meanwhile, a bad credit score can cause you to pay higher interest rates, as the lender will take you as a high-risk customer. Also, it can affect your score negatively and positively depending on how you manage your repayments.
Note: Paying all your accounts in full will give you a positive credit record. Whereas, missing a payment can negatively affect your credit score.
Requirements for applying for debt consolidation
Just like every loan, debt consolidation loans have some requirements that make you eligible for debt consolidation loans in Ghana. These include:
- Three months stamped bank statements
- Three months’ pay slips
- Copy of green bar-coded Identity book
- Proof of residency
- Details of your next of kin. Settlement letter of your latest existing loan accounts you will settle.
Conditions for debt consolidation
There are things that qualify you for a debt consolidation loan. They include a clear credit record and no arrears on your repayments.
What happens when you apply?
When you apply for a debt consolidation loan in Ghana, a financial adviser will process the documentation for accuracy. They will run a credit check on your account.
They usually calculate your repayments according to your monthly income. Hence, is a guide to what you can afford to repay.
They will require you to sign documentation, and they will pay the money out immediately.
Note: Don’t let debt control you, get a loan that’s best suited for your budget.
Getting a debt consolidation that suits you
There are several types of loans that you can consider. But when you are trying to merge your debt, there are a few of the most common types that you will run into. The ones that you can get on your own are secured or unsecured loans.
Secured loans require that the loan has a security of something valuable, like a home or car. They have lower interest rates than unsecured loans and do not have to pay it back immediately. Usually, if you have to pay off a loan within the first few months, it will have a higher interest rate.
Unsecured loans differ from other loans. They usually have lower interest rates than secured loans. This is because they do not need immediate pay back and will have a lower monthly payment.
For debt, there are many options that you can apply and they will all work differently for you. So, it is necessary to always talk to a professional to find out what is best for you before applying. Also, the options may vary regarding which loan you are considering.