What is Debt Consolidation?
Debt consolidation has become a popular option for people looking to manage and pay off their debts more effectively. But what exactly is consolidating debt, and how does it work?
Debt consolidation is an option that allows people to combine multiple loans or debts into one single loan. This means instead of making multiple payments to various creditors each month, borrowers can make a single regular payment towards one main loan.
The concept behind consolidating debt is simple: by refinancing all of your debts into one loan, you can streamline your payments and potentially reduce your overall interest rates. This can make it easier to manage your different payments and may ultimately pay off your debts faster.
When you take out loan to consolidate debt in NZ, the lender will typically use the funds from the loan to pay off your existing debts on your behalf. From there, you will be responsible for making regular payments towards the consolidated loan until it is fully repaid.
Types of Refinancing Loans in NZ
There are a few types of debt consolidation loans that you may want to consider.
One type is a secured debt consolidation loan. This form of loan requires collateral, such as a home or a vehicle, which serves as security for the lender. By offering collateral, borrowers may be able to secure lower interest rates and longer repayment terms. However, it’s important to note that if the borrower defaults on their payments, they risk losing their collateral.
Alternatively, unsecured debt consolidation loans do not require any collateral. These loans are typically based on the borrower’s creditworthiness and income. While they may have higher interest rates compared to secured loans, these loans provide borrowers with the peace of mind that their assets are not at risk.
Another option for consolidating debts is through personal loans specifically designed for debt consolidation purposes. These loans are often offered by banks or online lenders and can be used to pay off various types of debts such as credit card balances or medical bills. Personal loans for consolidating debt usually have fixed interest rates and repayment terms that allow borrowers to create a structured plan for paying off their debts.
The Application Process
When considering consolidating debt, it’s important to understand the application process and the eligibility requirements. By familiarizing yourself with these aspects, you can ensure a smooth and successful application.
To apply for a debt consolidation loan, the first step is typically to research and compare different lenders and their offerings. Once you have chosen a lender, you will need to gather certain documents to support your application.
The eligibility criteria may vary from lender to lender, but there are some common requirements. You will generally need to be at least 18 years old or older. Additionally, lenders typically require proof of income or employment to assess your ability to repay the loan. This can be in the form of recent pay stubs or bank statements.
Furthermore, lenders may consider your credit history when evaluating your eligibility for debt consolidation.
In terms of documentation required for applying, it is advisable to have the following ready:
1. Proof of identification: This can be provided through a valid passport or driver’s license.
2. Proof of income: Recent pay stubs and bank statements showing regular income.
3. Employment details: Provide information about your employer such as their name, address, and contact details.
4. Debt information: Make a list of all outstanding debts that you wish to consolidate including creditor names, account numbers, balances owed, and monthly payment amounts.
5. Financial statements: Some lenders may require recent bank statements or other financial documents as proof of your financial stability.
At Exceed Finance, many of these documents can be provided securely online, saving the hassle of finding or printing the documents beforehand.
apply to Consolidate your Debt!
Applying for a loan in NZ has never been easier with our fast and easy online application process. Just apply here to get started!
At Exceed Finance, we understand the stress that overwhelming debt can bring. That’s why we have a team of experienced brokers who are dedicated to helping you find the best solution to consolidate your debts into one manageable loan.
Check out our online Debt Consolidation Loan Calculator to get an estimate on how much you could borrow or your estimated repayments.
Our tailored loans are designed to suit your specific needs, giving you the opportunity to regain control of your financial situation.
Have some questions? Feel free to Email us or Call 0800 239 2333
