Consolidating your outstanding debts has several advantages like added convenience and peace of mind.
You also get competitive interest rates, meaning the monthly repayments will be lower. With ample savings tucked aside, you can pay off the new personal loan earlier than expected.
But the key factor to note is to pick the best debt consolidation loan interest rates.
Why Are Lower Rates Crucial?
Personal unsecured loans are typically fixed-rate and fixed-term loans. People with average to excellent credit scores can qualify for these types of loans. You can get a competitive rate of 4.99% for having a good credit rating.
With a single repayment schedule, you will have a clear timeline for the end of the loan term. Now, if you have any savings during this time, you can make additional higher repayments. As you pay off a significant chunk of the loan, you will be much closer to becoming debt-free.
But consider a contrasting situation where the interest rate is higher. It means your new overall debt will be higher compared to your current obligations. Also, if the credit provider has hidden charges or establishment fees, they increase the monthly repayment amount.
So, it is crucial to compare loan rates before debt consolidation.
The Process to Compare Debt Consolidation Loans
You must note that although these types of loans are called personal loans, they vary with the provider. Primarily, the loan amount limits, establishment fees, other charges, loan terms, and repayment can differ.
Apart from your credit history, these are the vital factors that can increase or decrease the interest rates.
Interest Rate Type
The next factor is whether the loan rate is fixed-type or variable-rate. With the former, you can enjoy a low rate throughout the loan term. You have a sense of predictability with a locked-in rate, allowing you to pay uniformly every month.
In contrast, a variable-rate loan can fluctuate, and you can’t keep track of it with time. When you want a streamlined approach to consolidating your debts, this type of rate plan is not ideal.
Extra Repayments
As mentioned above, you can make additional payments to clear the debt. But some providers charge extra for this facility, or you incur a penalty for closing early. Hence, before signing up, you should be well-informed about all the company policies.
Other Fees
Choosing a provider who displays transparent pricing without any hidden agenda is crucial to help you achieve your aim. Some lenders guarantee a loan if you pay some amount in advance. It is better to steer clear of such spurious companies and trust one with zero fees.
Loan Calculator
Use the bank’s online tool on the website itself. You receive indicative rates by providing your details and preferences like loan amount, term length, repayment frequency, and credit situation.
- Typically, the loan amount is between $2,100 and $30,000.
- Pay the loan back in six to sixty months.
- Repayment frequency can be weekly, fortnightly, or monthly.
Eligibility Criteria
Personal loans are ideal for you if you want the amount credited quickly. Based on the hard credit check performed, lenders can give you an outcome account within a few business days. Here is how you can qualify:
- Be an Australian citizen or permanent resident
- Not be bankrupt
- Hold a steady job with adequate income
- 18 years or above
- Maintain average to excellent credit
Starting today, you can improve your credit rating by clearing missed payments, paying off late payment penalties, etc.
Choose the Right Lender
Simply getting the best debt consolidation loan interest rates is not enough. The credit provider should also be reliable and understanding of your needs.
The rule of thumb is to find one that specialises in personal loans for debt consolidation. Such banks know that each borrower’s situation is unique, so are their needs. You can get personalised interest rates tailored to your requirements.
Start your research by going on independent loan comparison sites. Learn about the nation’s leading and reliable lender, their recognitions, awards earned, and profile. Check their Australian Credit Licence and read customer reviews for a clear idea before you sign up for a loan with any lender.
