Debt consolidation can put you back in charge of your finances - Bayport Financial Services
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Bayport Blog

Debt consolidation can put you back in charge of your finances

Published: November 4, 2021
Categories: Financial wellness
Tags: Managing your Money

How to know if debt consolidation is right for you

When you look at how to get out of debt, consolidating several different loans into one could be the best financial decision you’ve made this year.

Many people think that debt counselling (also known as debt review) and debt administration are the only ways to get debt under control. The truth is that debt consolidation might be a far better option.

What is debt consolidation?

Debt consolidation is a debt solution that combines several different loans into one. How it works, is that your credit provider negotiates settlement discounts with your other credit providers and then issue you a loan that is big enough to settle your other debts. Instead of many different debt repayments, you are left with only one monthly instalment.

Because of the settlement discounts, and because you no longer pay fees and bank charges on several loans, your one instalment is usually less than what you paid before. As a result, your cash flow is better.

When is debt consolidation the best option?

You should seriously consider debt consolidation when:

You are struggling to make ends meet, but there is no threat that you could lose any assets, such as your home or your vehicle.

You don’t need legal protection from any of your creditors.

Your credit score is good enough to qualify for a consolidation loan.

What should I know about debt consolidation?

It is not a legal process, which means the courts are not involved. This explains why debt consolidation does not give you legal protection from your creditors. But remember that because your loans are settled with the consolidation loan, your creditors have no reason to take action against you.

Your consolidation loan will reflect on your credit record, but it will not stop you from getting further credit if you can afford it.

Do consolidation loans work?

To answer this question, let’s look at what some Bayport customers have to say.

Customer 1

“By the time I came to Bayport, I had three bank loans and one loan from an unsecured lender, and I had taken loans with informal credit providers too. I could not keep up with the repayments and had fallen into arrears. The informal lenders were harassing me and I was scared and anxious. Bayport negotiated settlement discounts with my formal credit providers, and consolidated and settled most of my formal loans. The consolidation loan also gave me cash in hand to settle all my informal loans. Bayport cleared my credit bureau listings and settled my children’s outstanding school fees. My total debt repayments have been cut by R4 000 per month, which has greatly improved my cash flow. But my biggest relief is that I have been freed from the informal lenders, and I can now manage my finances on my own.”

Customer 2

“I was so stressed out about my finances that I had ended up in hospital. The HR people at the company where I work referred me to Bayport. By that time, I had no hope that my debt issues could be resolved. I owed a total of almost R267 000, and my monthly repayments were more than my salary. Bayport negotiated settlement discounts on my behalf and, with the consolidation loan, settled my four formal and five informal loans. As a result of all this, I can now afford my one monthly instalment and I will be debt free in a little less than five years. My financial situation, and my life, has well and truly been changed.”

It is always worth the effort to look into debt consolidation when you need to get your debt under control. Not only can it put you back in charge of your finances, but it can also restore your peace of mind.

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