The recession has undoubtedly changed the financial lives for us all. It has been harder for many of us to stay afloat and more of us than ever are struggling with debt. The recently released Veda report on Australian debt has found that more than 2.7 million Australians are struggling to meet their credit obligations and that it is going to become harder for people to secure new lines of credit in the near future. The reasons for this are that companies have changed the way they calculate credit reports to include levels and amounts of credit as well as previous unpaid debts and black marks. This means that people with high credit already are likely to find it harder to secure new lines of credit. The study also demonstrated that nearly a quarter of consumers will look to increasing their credit limits and that a quarter of people using credit are likely to fall into spiralling debt problems if the economic situation in Australia worsens. As a result, many of us need to re-examine our debts and more of us should consider debt consolidation as a means to re-secure our financial position.
Understandably, personal loans are one of the most popular forms of debt consolidation, as they allow you to take out one debt to cover many and to secure one lower monthly interest rate and repayment program. This means you can take control of your finances and return yourself to financial security; thereby avoiding the debt spiral.
The good news is that the rate of approval for personal loans and other forms of financing has risen by 1.1% in the last month, so it should be easier now than it has been previously.
The first thing you will want to examine is whether the rate for your personal loan will actually provide you with financial security once your debts are paid. You will want to calculate the monthly payments you currently need to make towards your debts and the payments you will face in the coming months. If this is less than the amount you would have to pay towards a personal loan then you shouldn’t consider this form of debt management. However, if it will definitely save you money and return you to financial security then you should definitely consider it as a way to manage your financial situation.
If you decide that a personal loan would make financial sense then you will want to make sure that you can secure the best deal possible. First things first, you will need to examine your existing credit rating and see if you will be able to secure the deals advertised. If you have a very poor credit rating then you may only be able to secure a personal loan at a higher rate so you will need to re-examine your debt to make sure you will still save money.
Once this is done, then you should make sure that you have an effective budget to make sure you will definitely be able to make the personal loan repayments. If a personal loan will still leave you struggling then you should consider other forms of debt management to avoid exacerbating your current problems. A personal loan is a very effective way to manage your debts but you should still be cautious and have fully analyzed the benefits before applying for a policy.