Debt Consolidation in South Africa remains to be one of the most effective debt management tools for South Africans. The program puts you in control and gives you the ability to address your debt payment a lot easier. In the process, it also allows you to manage your finances better so you can reach your financial goals in life.
This is important as Business Day shares that South Africa is considered the “biggest borrowers” in the world. This was a statement by the World Bank during their 2014-2015 report. This is a clear indication that South Africans are having a tough time managing their debts more responsibly. When it comes to debt management, debt consolidation can be a great financial tool to get you out of debt much faster.
Debt Consolidation Program
Debt consolidation in South Africa can be best used by people who have a number of debt accounts. They may be trying to manage these payments on a monthly basis but not having enough luck. If you have a similar experience, it is a good idea to consider using debt consolidation in managing multiple payments.
From the name itself, this debt management program aims to combine most, if not all your debt payments under one account. Once you take advantage of debt consolidation, you get to enjoy several financial benefits it brings. Here are some of them worth mentioning.
It might have been a struggle to try and keep in mind of several payment details every month. If you have 4 different credit cards all with balances from different lenders, it can be a struggle every month. You are trying to stay on top of 4 different due dates, payment amount, and most especially, different interest rates.
Debt consolidation can help you combine all these debt payments into one single and easy to monitor the account. You will only have to keep in mind one amount to pay every month, one date to pay your lender, and one interest rate to monitor. This limits the chance of overlooking a payment and being hit with multiple card fees and finance charges.
Lower Payment Amount
When you enroll in a debt consolidation program, you can do more than stay on top of your monthly payments. Consolidation debts could potentially lower down your monthly payments. One of the factors that can help you with a lower payment is an improvement in your credit score. The higher your score is, you can enjoy lower the interest rates. With this, it follows that the lower the interest rate is, the lower the payment could be.
One other way to lower down monthly payments is stretching the payment period over a long period of time. This gives you the chance to free up some funds in your monthly budget and allow you to either put away for savings or make extra payments on other debt accounts. The downside of this is that you could end up paying more on interest in the end.
Debt Consolidation in South Africa Helps Protect your Credit Score
Debt consolidation can be a great way to protect your credit score as well. It is important to understand that your score plays a pretty big role in how you are perceived by lenders. The lower your score, you will either be given a high-interest rate or be simply declined for loan applications. On the other hand, a higher score gives you the opportunity to enjoy lower rates.
One of the reasons for this is that lenders see you as a risky investment when you present a low score This means that you are not financially responsible and might forfeit in your payment. South Africans with high credit score portray a financially conscious person who will see the payment through until the end.
Debt consolidation in South Africa can be your best bet in getting you out of your financial woes and provide a path to debt freedom.
Applying for a Debt Consolidation Loan
Debt consolidation lenders in South Africa usually look for the following documents:
- Proof of identity
- Most recent payslips
- Three months’ worth of bank statements showing details of your monthly salary deposit
- Proof of residence
There may be other documents your lender will require once you proceed with your loan request.
Top Debt Consolidation Loan Lenders in South Africa