WHAT IS DEBT CONSOLIDATION?

There are 2 types of Debt Consolidation

1. DEBT CONSOLIDATION WITHOUT A LOAN

If you are struggling to pay your debt, you are blacklisted and you have tried getting consolidation loans but have been declined, this is for you.

2. DEBT CONSOLIDATION LOANS

If you have a good credit record and you are not blacklisted, this could be a good option – consolidating smaller, more expensive, loans and credits into one more affordable loan.

 

How does it work?
The theory behind a consolidation loan is all well and good as long as it is a permanent solution. However, statistically this is only a short term solution as you are more likely to re-use credit that has now become available to you (credit cards, store cards etc.). The cycle tends to repeat itself until such time that you can no longer consolidate any further and fall into a debt trap that you can no longer control.

If you are serious and want to live DEBT FREE then speak to one of our trained consultants that will help guide you and show you a way in doing just that and the fastest possible way still ensuring that you can live day to day without the stress of wondering how to put food on the table.
Talk to us to to see if a debt consolidation without a loan is your best option.

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WHAT ARE DEBT CONSOLIDATION LOANS?

If you are over-indebted with multiple debts, a consolidation loan from a debt consolidation company may seem like the ideal solution. But, Debt Consolidation Loans have high interest rates and admin fees. Should I get a debt consolidation loan?

 

Let’s look at a simple example:

1

Thandi is in debt

All her hard-earned money is going into repayments.

Thandi cannot afford her monthly repayments. Her total owings is R250,000. With an average interest rate of 23%, it could end up costing her a total of R424,272. She currently pays R8,839 / month on her monthly repayment.

2

Thandi considers getting a consolidation loan

She notices most registered credit providers in South Africa only offer loans up to a maximum of R250,000.

She can extend her repayment term to lower her monthly instalment.

3

She considers repayment periods

She can pay back the loan over the maximum repayment term of 84 months (7 Years) at a yearly interest rate of 21.7%.

To obtain the loan, she needs to pay a once-off initiation fee of R1207,50 as well as an ongoing monthly service fee of R69.

4

She works out her monthly repayments

Thandi would now pay R6,769 towards her consolidation loan.

She can save around R2,070 on her monthly instalment.

5

She finds out the real cost of consolidation loans

How much did Thandi end up paying in total for her R250,000 debt consolidation loan including interest?

 

R568,569

 

She may have saved approximately R2070 p/m in repayments, but she increased her long term capital debt by R144,324