When Should You Consider Taking A Debt Consolidation Loan?
Ensure that your debt is not more than 40% of your entire income
Strive to sustain your debt payment not more
than 28% of your monthly income before the deduction of taxes. Ensure that your
complete debt amount is not more than 40% of your monthly payments without tax
deductions. Try to keep it below 40% as the maximum can be 40%. It's highly
recommended to keep it less than 28% if possible when you take a debt consolidation loan in Australia.
A good credit score will
help you to get a 0% or low-interest debt consolidation loan.
A single-digit interest rate is always something
you want to consider. You get a high credit score even if you pay the least
amount on time, and you need to maintain your credit to get the least interest
rate.
When Should You Not Consider Taking A Debt Consolidation Loan?
Not to consider when
too many debts
It's not a solution for all your debt problems
if you have too many debts to pay off but not the income to manage your debt
payments well. Taking a debt
consolidation loan does not mean that you can acquire a new debt burden
on your head. First, ensure to clear the ones you already have, and if it can
be done without the debt consolidation loan, then go ahead ad do so as it will
save you from paying the interest amount.
Debt that can be cleared within a small duration
If your debt is small and can be cleared off
early, then taking a debt consolidation
loan is not the right option.
Less income and more debt
In case your income is less than your debt, then even an expert will advise you not to drown with the burden of taking a loan wherein you will be considered of the interest rate you will have to pay as per the tenure.
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