APPLY NOW BLOG FAQ 07 5452 7400 Client Log In

APPLY NOW

Is Getting a Loan to Pay Off Debt a Good Idea?

Are you accruing a lot of debt and looking for a way to improve your financial situation? If so, debt consolidation loans may be the way to go. Learn more about these types of loans here.

Having a lot of debt can be very stressful. When trying to improve your financial situation, getting rid of as much debt as possible is the first thing you begin to think about. So, what’s the best way to consolidate debt? Should you apply for a loan to pay off debt? Well, that depends…

One Viable Option is to Consolidate your Debt

A personal loan for debt consolidation is an easy and effective way to combine all your debt into one repayment. However, there are pros and cons to applying for debt consolidation loans. It is important to know the risks and make sure you will be saving money in the long term. 
 
Firstly, what is a debt consolidation loan and how does it work?  An example of one would be if you have a credit card with a debt of $4000, a car loan of $7000 and a small personal loan of $500. Each of these debts have their own interest rate and their own repayments.  It can become difficult to stay on top of each individual arrangement.  To simplify your financial situation, you would consolidate all these debts into one personal loan for debt consolidation of $11,500.  This would allow you to have one single, personal loan consolidation repayment and one interest rate.  

4 Benefits of Debt Consolidation Loans

  1. The best debt consolidation loans will have a lower interest rate compared to multiple loans combined which can assist you in saving money in the long term and paying a lower amount of interest to what you would on multiple individual debts. 
  2. Only having to look after one consolidation loan can create a clearer timeline to when you can be debt-free. 
  3. Maintaining one loan repayment can help you avoid financial difficulty and can keep you and your credit score out of trouble. 
  4. The best debt consolidation loans can also give you more control over maintaining your budget and your cash flow. 

3 Cons of Debt Loans 

  1. A personal loan with a longer term can assist in reducing your monthly repayments, but you do need to be careful to make sure that you don’t end up paying more in the long run. 
  2. Shopping around to find the right consolidation loan for you could result in multiple loan applications and multiple credit file enquiries which could end up damaging your credit score. 
  3. In some circumstances, debt loans can put people into worse positions. While they help to roll all debt into one, they don’t assist a person in their behaviour of building debt. Having one loan can put you into a false sense of security where you will then go out and obtain more debt and slip back into the same issue you started with, but with even more debt than before.  

Other Considerations Before you go Ahead and Consolidate your Debt

To finish, when looking into getting a debt consolidation loan it is important to know what you are looking for and what is going to improve your financial situation. 
 
Explore your options and know your credit rating and serviceability.  If you feel your debt is getting out of control, ask yourself the hard questions and make sure you can meet your financial obligations before approaching debt consolidation companies.  
 
Don’t settle for a consolidation loan without making sure that it is going to benefit your finances in the long run and that aren’t rushing into something that will end with you paying more or being in debt for longer than you need to be.  Be proactive in taking control of your debt and understanding what your future will look like with these different types of loans before signing any documentation. 

Have More Questions? Contact Champion Loans!

If you have more questions regarding applying for consolidation loans to pay off debt, please contact Champion Loans. And, please don’t hesitate to contact our team if you need us to provide guidance and help with debt consolidation options that are open to you. We can inform you of all available options and provide you with top debt consolidation services. 

< Return

Developed by KOOK

Calculate your repayments 

Step 1: Select Loan Amount
 
Loan Information:
  • $The maximum you will be charged is a flat 20% Establishment fee and a flat 4% Monthly Fee with a comparison rate of 132.23% p.a. This comparison rate is based on a small amount credit contract of $700 repaid over 12 months with an establishment fee of 20% any monthly fees of 4%.
  • $The above repayment is based on an interest rate of 48.00% and establishment fee of $400.
    Comparison Rate: 69.38% p.a. This comparison rate is based on a loan for an amount of $2500 over 2 years and a $400 establishment fee .
  • $The above repayment is based on an interest reate of 48.00% and establishment fee of $0.00.
    Comparison Rate: 48.00% p.a. This comparison rate is based on a loan for an amount of $2500 over 2 years and a $400 establishment fee.
  • $The above repayment is based on an interest rate of 23.00% and establishment fee of $800.
    Comparison Rate: 38.59% p.a. This comparison rate is based on a loan for an amount of $6000 over 2 years and an $800 establishment fee .
  • $The above repayment is based on an interest rate of 21.00% and establishment fee of $800.
    Comparison Rate: 28.92% p.a. This comparison rate is based on a loan for an amount of $8000 over 3 years and an $800 establishment fee .
  • $The above repayment is based on an interest rate of 18.9 % and establishment fee of $800.
    Comparison Rate: 25.05% p.a. This comparison rate is based on a loan for an amount of $10,000 over 3 years and an $800 establishment fee .

WARNING: This comparison rate is true only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate with the lender that finances your loan.

APPLY NOW