Where can I go to consolidate my loan?
I am looking for a loan to consolidate my debt. There are several companies I came across with this product, but I’m not sure how credible the majority of them are.
City Press replies:
Debt consolidation is not necessarily a solution to a debt problem. Reports from debt counsellors show that in about 80% of the cases where individuals have consolidated all their debts into one loan, they do not adjust their lifestyle or living expenses and end up reopening the credit lines they closed with the consolidation loan. This just leads to further indebtedness and, ultimately, legal action or debt review.
Be very aware of this risk when you decide to consolidate and make sure you are making the adjustments to your budget so that you do not access further credit.
In terms of credit providers, the major banks offer consolidation loans. If they turn you down due to your credit record, then smaller credit providers who have greater risk tolerance will offer a loan, but at a much higher rate and with higher fees. If you do not qualify for a bank loan, then you may find the other offerings too expensive to be worthwhile.
Also be very wary of loan scams, where consolidation loans are offered but you are required to pay legal fees or consolidation fees upfront. No credit provider will ever ask for upfront payment.