How to Work Towards a Debt Repayment?

Debt Repayment

Debt levels in Australian households are increasing daily, and repaying them is challenging. If you are struggling to keep track of what you owe, you may consider a personal loan. Alex Bank – debt relief loans are designed for each borrower’s unique needs.

Based on your financial situation, you can take out a personal loan at low rates.

Good and Bad Debts

Not all debt is bad. This classification depends on various factors like your income, expenses, quality of debt, and your financial situation.

A “good” debt is one you take to boost your current situation, such as a personal loan that helps you consolidate smaller debts. Bad debts are those that diminish your wealth in time, like buying non-essential items at the store on credit.

Under certain circumstances, you may consider borrowing money from a reputable lender to clear existing debts. The key is to find a tailored solution that works for you by taking a critical look at your debt.

How Is Debt Consolidation Beneficial?

Typically, debt consolidation loans come with comparatively lower interest rates.

You can consolidate your debt into one loan with a convenient repayment period, ranging from six months to five years. Make payments at a frequency you like – weekly, fortnightly, or every month – and streamline your finances.

Here are the most vital steps on how to make a new debt consolidation loan work for you:

1.   Map out Your Debts

It is time to jot down the list of all current debts, including personal loans. Although tedious, this process helps highlight the obligations that have to go. Against each debt on a paper or spreadsheet, note the interest rate and outstanding balance.

Compare the remaining repayment periods and the individual and overall amounts you pay each month. Rank each debt according to how much income they eat away, and you’ll know which one hurts the most.

This debt hit-list will show you the more expensive and non-deductible debts that you must clear first, and let you know which ones can wait.

2.   Be Honest About Your Expenses

This step involves being a bit ruthless in cutting down unnecessary expenses. Ask yourself some critical questions and answer them honestly.

  • Do you need all the facilities you have now?
  • Can you do it with a cheaper energy plan or internet?

Go through everything to understand where you spend on non-essentials, such as manicures or takeaway meals. Parting with these recreational activities temporarily can help you get back to a better financial state. Nonetheless, be sure to have at least $1,000-1,500 for unexpected expenses or emergencies.

3.   Consolidate Your Debt with a Personal Loan

You can pay off the must-go outstanding debts with a personal loan. You only have to worry about a single payment every month and save money in the process. Since you have only one loan, you will be able to keep track of it and make all your payments.

This also means that there will be less scope for late or missed payments. With consistent monthly repayments, you can also improve your credit score. It will be easier if you want to borrow more money later. You can get a personal loan for emergencies like medical bills, car repairs, or home renovation.

4.   Use the Savings to Clear the Loan Earlier

By making regular payments with lower interest, you can increase your monthly savings. This amount can go towards the early repayment of the loan, and there will be no additional fees. So, you become debt-free faster.

This also saves you a decent amount of time every week or month. You can look at these time savings as an investment opportunity. Remember the nice-to-haves that you cut down in the first step?

You can now comfortably review these options and research the best providers. Whether it is your insurer or energy service, look for ways to further save money by getting a better deal. It could compound your benefits over the years.

Choose the Right Bank

Picking the right provider is crucial when it comes to personal loans.

Look for benefits like:

  • 100% digital application process
  • Funds within one business day
  • Personalised interest rates as low as 4.99%
  • Straightforward eligibility criteria

Your lender should be available to answer your queries and find a customised solution for you. Also, there shouldn’t be any hidden fees that can drastically increase your monthly payments.

Check out loans such as Alex Bank – debt relief loans as the provider has received multiple awards and recognitions in the industry. Be informed about all the regulations and choose a suitable lender.