How do debt consolidation loans work?

Life has become expensive and, for many of us, a loan seems to be the immediate solution to tackling our debts. The sad reality is getting into more debt is not the answer. If you are drowning in debt, remember that you are not alone.

If you don't have your debt under control, you could find yourself in an awkward position. Multiple loans could cripple your financial wellbeing and play on your mind. More debt could leave you with less money every month. A debt consolidation loan could be the solution you need.

What are debt consolidation loans?

A debt consolidation loan is one large loan that will pay off all your smaller debts. Consolidating your debts will give you only one loan to pay off and one lot of interest instead of many. Debt consolidation makes it easier to monitor your payments every month, with only one debt to worry about and one lot of interest to consider.

Consolidating your debts could be more cost-effective in the long haul. It only works in your favour if the interest rate is lower than all the smaller interest rates combined. Your lender will calculate your interest rate according to your income, credit score, and other financial markers.

What should I know before taking out a consolidation loan?

Did you know that you can negotiate with your other creditors when settling your outstanding debt? Your creditors will more than likely agree to a much reduced settlement amount. Your consolidation loan amount could then be less than all the combined amounts of the smaller loans.

You could get on top of credit card debt and improve your credit rating by simply consolidating your debts. Watch your cash flow improve right away with a single payment. Your credit record and score will automatically improve.

Where can I get a loan for debt consolidation?

African Bank offers debt Consolidation Loans to qualifying South Africans. All other accredited institutions are able to offer you debt consolidation loans. Accredited institutions include banks and financial service providers.

The application process for loans for debt consolidation is not complicated. Many financial institutions offer an easy electronic application option. All loans for debt consolidation are regulated by the SA National Credit Regulator. This falls under the National Credit Act of 2005.

It's a good idea to make sure that the loan you take out is with a debt consolidation company with a good reputation. Have you reviewed our debt consolidation loan offering? We are a licensed financial services provider with a good reputation that can assist you with a debt consolidation loan.

Why debt consolidation loans are important

When monthly debt payments are out of control, debt consolidation could be the answer.

Are your loan repayments making you ill? Statistics show that many South Africans are being plunged into personal debt! One of the common reasons people are taking out more debt is to settle their personal loans and get ahead of credit accounts.

This is a no-win situation for many. Statistics reveal that in 2018, 25 million South Africans had some form of debt. As many as 40% of these borrowers were behind in their debt repayments. You can solve your debts with a debt consolidation loan.

Does your monthly debt payment leave you very little to live on? If you have many little loans from different lenders, it can be difficult to honour these. You can get the financial assistance you deserve today. Loan money need not be bad debt!

To consolidate your debts, you can find an affordable repayment plan with one loan and one interest payment. Your repayment terms might be longer, but they will prove to be more affordable. The general idea it to take out a new, larger loan — large enough to pay off all your old ones — leaving you with a single, manageable loan to service.

You can live better by banking smarter. Bank loans can make a difference!

What are the benefits of debt consolidation loans?

With a debt consolidation loan, there is no need to worry about paying your accounts on time. You can simply settle one debt every month and maintain and protect a good credit profile with one direct payment. If you have a damaged credit record, you can rectify it with this easy process.

1. You only have to pay one monthly fee. Ditch the small monthly payments and settle one bill each month!
2. Your monthly repayment should be lower.
3. Maintain a healthy credit score. Ensure you improve your credit score by paying only one monthly bill.

How much can you afford to pay for a loan?

Different people can afford different rates. You can work out how much you can afford to pay for a loan by calculating the amount of money you have left after you have met all your monthly obligations. This process can help you assess the viability of your debt consolidation loan offer, the loan term, and whether you can afford loan payments.

5 things you need to know about consolidating your debts with a loan

1. Your consolidation loan might have a longer repayment period than your other personal loans. This could translate into paying more interest when loan terms are extended.
2. Consolidating smaller accounts, such as store accounts, might take longer to pay off.
3. With more money on hand, it is tempting to spend on more credit. Remember, it is about getting rid of debt and not making more debt. Spending more could get you back to square one.
4. When consolidating debt, it is smart to do some careful calculations. It is not about the duration and amount your monthly payment is alone, but also about all the costs involved when you take credit.
5. It is a good idea to get an online quotation before you decide to take out a single loan to settle your debts. You can then ensure the consolidation is going to benefit you and will be affordable enough to pay off.

Debt Consolidation solutions from African Bank 

African Bank debt Consolidation Loans offer customers options of up to R250 000. You can use the cash for any financial need you have. We are a reputable SA financial institution, offering a diverse range of services. These include bank accounts, credit cards, investments, loans, and more.

Apply for a debt Consolidation Loan and get a quote today for an African Bank Consolidation Loan offer suited to your lifestyle.

Contact African Bank today to find out more about how you can consolidate your debts and take steps towards financial freedom.