If you’re planning to start your own business in the year ahead, you’ll probably need to be talking to financial service providers about setting up a line of credit to give your business the cash-flow that you need to operate on a day-to-day basis.
When a bank or other lender is considering your application for a line of credit, they’re going to be looking at your personal financial position – your assets, your income, your expenses, and your debts.
One of the considerations is not just the total amount of outstanding debt that you have, but also the way that the debt that you have is structured. If you’ve got numerous credit cards, and a couple of personal loans, and possibly some finance on your vehicle, then that’s not as stable as having a single loan with a manageable repayment.
That’s why a lot of people consider debt consolidation as an important first step when rebuilding your financial foundations.
How do I consolidate my debts?
Most financial institutions will have some form of specialist debt consolidation products. These will generally offer you lower fees and charges, and a lower interest rate, for bringing all your debts together and closing down the unwanted credit cards and loan facilities.
However there are also specialist debt consolidation companies that can be a useful resource in this process.
How to choose a debt consolidation company
Not all debt consolidation companies are equal. Make sure you do your research, consider any available online reviews, and ideally follow a recommendation from someone you trust.
When you’re comparing different debt consolidation companies, look at the different fees and charges that might be incurred.
As well as any upfront fees and charges, you also need to consider the term length being proposed by the debt consolidation company. What’s the total cost of your repayments going to be over the life of the agreement? A higher monthly repayment amount might be preferable if it pays your debts off quicker and saves you money in the long run.
Consolidating your debts can be an important way to simplify your financial affairs and get you back on the road to sound financial management. Ensure that you seek independent financial advice to ensure that you choose the debt consolidation option that’s right for you.