If you’re determined to face your debt with discipline, a debt consolidation loan is a powerful tool that could pave the way for a healthier financial future. It’s a fantastic way to simplify your finances.

 With a debt consolidation loan, you can turn several loan payments into one cost-effective payment. So how does debt consolidation work? Below we unpack how you can benefit from a consolidation loan:

• You can combine several creditors, all with their own terms, monthly fees and interest rates, into one easy-to-manage payment.
• You can usually save some money because one monthly repayment at a favourable interest rate is more affordable than several payments with varying interest rates.
• You can settle several debts and only have one loan instead.
• Settling your debts helps to improve you credit record. (Read more: How to improve your credit score)
• Less stress. It allows you to deal with only one institution, rather than multiple creditors asking you for payment.

A disciplined approach to consolidation loans

A consolidation loan might make things easier, but it still requires discipline. Create a budget and be strict with yourself. Use your consolidation loan as a stepping stone to a better financial future and don’t take out additional credit while you’re paying it off. 

Do your homework first

Before signing on the dotted line, be sure to compare interest rates and payment terms from different institutions. With African Bank, you can get a single Consolidation Loan for up to R250 000, with the option to combine up to five loans into one. When you qualify for an African Bank Consolidation Loan, you can also choose when you would like your “payment break” – one month when you can take a break on your repayment.

Consider your affordability

Before applying for a Consolidation Loan, it’s a good idea to get to grips with your finances. To see if you can afford the loan, credit providers take the following into account:

• Income after tax
• Necessary expenses like your bond, transport and food
• All other financial obligations, like standing debit orders, insurance, medical aid, etc.
• The amount left over which can be used to repay the loan

Ready to apply for an African Bank loan? It’s quick and easy to apply for an African Bank Consolidation Loan, and you can upload your documents through our website. Click here to get started. These are the documents you’ll need:

• Identity document
• Latest payslip
• Latest bank statement reflecting three salary deposits
• Proof of residence

Read more: Know your rights when applying for a loan