19 Sep A Debt Consolidation Example

Have you ever thought about consolidating your debt? Debt consolidation allows you to pay off all your debt at once. Secure lower interest rates, longer repayment terms, savings on admin fees, and a team to back you financially.

You might be wondering what debt consolidation looks like in real life. Not to worry– Debt Refinance has put together a handy example of debt consolidation and how it works.

Example of Debt Consolidation

Ciara grew up in a financially unstable home. She didn’t have a role model who taught her positive financial behaviour as a youth. Her hamartia: using retail therapy as a cure-all. She developed an unhealthy habit of spending revolving credit (like store and credit cards) to shop for consumer goods.

She owed R70,000 on her car and an array of personal loans. Her interest rates racked up as she struggled to meet minimum credit payments. Her admin fees were exorbitant, too, especially on her credit cards. Ciara’s best friend told her about how she had just taken out a consolidation loan, so she decided to do some research of her own.

She discovered that she could pay off all her credit accounts at once with one larger loan. At first, she was scared about taking out yet another loan but then scrolled down to find that debt refinancing offered much less interest than her other credit accounts, had a longer repayment period, and had one much smaller admin fee. With a consolidation loan, her accounts wouldn’t fall into arrears.

How Debt Consolidation Helped Ciara

She contacted us and discussed her circumstances. Since she’d been keeping up with her payments, albeit struggling to, her credit score was high enough that we were able to give her a very low interest rate. She took out a R120 000 consolidation loan and agreed to pay it off within 3 years.

Fast forward 3 years and Ciara’s debt is paid off. Her credit score is in the 800s. Since she’d kept her old accounts open, her credit portfolio is still diverse. She uses her credit card to buy groceries and pays it off in full each month. She has just put down a deposit on a new car with her husband using the money she saved each month with her consolidation loan.

How Could a Consolidation Loan Help You?

By combining multiple debts into a single loan, you can secure lower interest rates, reducing the overall cost of borrowing. Additionally, longer repayment terms can provide more flexibility and alleviate monthly financial strain. Consolidating debt can eliminate the burden of managing multiple payments and associated fees, simplifying your financial life. With a dedicated team to support you, you’ll have access to expert guidance and assistance throughout the process.

Contact Debt Refinance today and find out how you could save with a consolidation loan.