Debt Consolidation Loans for Centrelink Customers

Debt consolidation can save you from a financial crisis. It’s the best way to manage your due dates and lower the interest rates you pay, thus reducing the total debt amount. 

If you’re struggling to keep up with your payments, debt consolidation loans are one of the options that you have to consider. In this article, we’ll let you in on all the details you need regarding how debt consolidation works for Centrelink customers and how it can turn your life around and save you from hardship. 

What Is Debt Consolidation? 

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Debt consolidation refers to combining multiple loans into one large debt but with more favourable repayment terms. If you have multiple liabilities, a consolidation loan will help you lower the interest rates and stay focused on your repayment plans rather than being distracted by deadlines here and there.

This makes the debt more manageable and takes off some of the stress that’s hard to cope with when you have multiple commitments and you’re low on cash. 

Why Should I Consolidate My Debt? 

Consolidating your debt gives you certain advantages that are otherwise unattainable, particularly when you’re having trouble managing your finances. These advantages include: 

Better Repayment Plans

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Debt consolidation doesn’t only cut off part of the amount you pay on a monthly basis, but the overall debt will be lowered, as well. 

Moreover, you’ll have regular fixed payments, which makes a world of difference if you’re dealing with multiple bills every month and losing track of their deadlines, late payments fees, and other terms that compel you to pay extra money. 

Less Monthly Expenditure

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Dedicating less money to your loans means having more money to save for future payments and spend on your pleasures. Perhaps it’ll allow you to take some time off at one point; we know that debts are such a burden. Also, this will significantly reduce the stress you’re experiencing. You’ll perform better at work, maybe even get a raise if you can stay focused for longer. 

Less Risk of Collateral Repossession 

 

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You probably already know that lenders have their money back one way or another. Failing to make your payments on time means losing the asset attached to the loan.

Even if you have an unsecured loan, falling behind on payment pushes lenders to turn to collection agencies, or even worse, they can take you to court. Either way, there’s a big chance you’ll lose your possessions, maybe a car, a home, or you might even end up with wage garnishment. 

With loan consolidation, you’re keeping the risk of going through these experiences as minimal as possible merely because there’s a better chance that you can keep up with your monthly payments. 

Improving Your Credit Score 

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With things getting out of hand, there’s a good chance your credit score is wrecked as well. This wouldn’t just impact future loans; chances are, you won’t get away with other rights as well.

However, consolidating your loans will help you make regular payments, so it’ll fix the damage done to your credit profile. Accordingly, you’ll be able to take out other loans in the future; you can move to a better home or do whatever you’ve planned for the future. 

Debt Consolidation Loans for Centrelink Customers

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It’s a little harder for Centrelink recipients to consolidate their loans. Nonetheless, some lenders will still approve the request depending on the type of payment you’re receiving. 

How Do Centrelink Recipients Apply for Debt Consolidation? 

Whether you’re receiving Centrelink Payment or not, the process of getting a consolidation loan goes the same. The first option is that you receive a balance-transfer credit card to roll all your debts into a single, low-interest loan, or you can take the amount you need to repay all your debts then pay back the loan according to the agreement you have with the lender. 

Important Tips Before Applying for a Debt Consolidation 

As we were just saying, a debt consolidation loan can be a bit challenging for Centrelink recipients. However, these tips will make things easier. 

Check Your Credit Score

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Checking your credit score lets you know where you’re standing and gives you an idea of whether you’ll be approved by different lenders or not as you check their guidelines and requirements. Moreover, checking your credit score gives you the chance to dispute any errors that reduced it in the first place, and hence, increase your chance to get a loan. 

Proper Research 

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You can always find better offers if you dig a little deeper. Also, you should keep in mind that your research doesn’t stop at finding a good offer. You’ll have to find the best offer that allows you to take enough funds to get rid of your other debts and with a lender who would probably accept you.

Additionally, you should do some research to make sure that the lender you choose is certified and trustworthy.

Is Debt Consolidation Different Than Debt Agreement? 

A debt agreement (also known as Part 9) is different from debt consolidation. Whereas debt consolidation loans for bad credit aim to reduce the number of creditors you’re dealing with and lower the interest rates, debt agreements aim at lowering the amount you owe to different lenders. 

Long story short, it involves a third party that negotiates with your creditors to let you pay less than what you actually owe them.

What’s the Downside of Getting a Debt Consolidation Loan?

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The only downside to debt consolidation is the potential loss of some provisions. For instance, interest rate discounts and rebates will no longer be on the table. 

What Happens If I Default on a Debt Consolidation Loan? 

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Defaulting on debt consolidation loans takes away many of the advantages that come with these loans. The only thing that won’t change is that you’ll still deal with a single deadline. However, if you miss a payment, you’ll have to pay a late payment fee, and there’s a big chance the interest rates will increase.

It’s worth mentioning, though, that whether you’re receiving a Centrelink payment, have a bad credit profile, or maybe both, any lender who agrees to give you debt consolidation loans for bad credit and unemployed probably expects that you might have trouble with some payments.

Accordingly, those lenders usually offer you a grace period, during which you won’t be charged any additional amount even if you were a little late. 

The grace period differs from one lender to the other; however, it’s never more than 30 days. The general rule is, if you exceed 60 days without making any payments, you’ll be charged a late payment fee. 

Bottom Line

Debt Consolidation loans are by far the best option to manage multiple debts and get some burden off your chest. We always recommend finding a financial expert or consultant to help you make the right decisions. That being said, we believe you’re ready to make a good choice just going through this article!

About the Author

Lucy has over a decade of experience in finance. She is currently the content curator here at Perfect Payday.

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