I was wondering if I could get some input on debt consolidation.

Basically I want to settle all debt and instead of paying 3/4 different people little monthly installments, rather pay 1 set installment at a lower interest rate for a fixed term.

This is how I understood it when they explained it to me in any case.

has anyone made use of such a service?

Thoughts?

Advise?

Scathing Sarcasm?

For short term loans from the bank expect interest rates in excess of credit cards. They really screw you over. And micro loans are also way too expensive to be a real option. So unless you have some rich family that can give you lower interest rates, you should start planning your nightly street corner activities for a quick buck.

At the end of the day, you will have to sit down and do some sums.

A friend of mine took out a loan of about R30 000 in order to settle all her other debts, so that at the end of the day, she was left with only one loan to pay off. As Val said though, these type micro loans can have hefty interest rates involved (thank goodness for the transparency brought about via the National Credit Act though).

You can try speaking to the various companies you owe, and ask them what type of arrangements can be made with them, as you would like to settle all your debt with various companies. Most companies are very forthcoming with arrangements - after all, they would rather get back all that you owe them, then go through the process of blacklisting you, and writing off your debt as bad debt.

Credit cards offer some nasty interest rates, and even worse, they are just too easy to abuse. It is normally a good idea to start paying them off, but at the same time, also try your utmost best not to use them while you are trying to settle them, because you will just fall back into the spiral with these kind of things.

Live by the principle that, "If I don't need it, then I won't buy it." Too often we spend money on things that we want, but do not need, and these things just end up lying around the domicile in the end, not being used. Avoid buying groceries on credit as well (especially the overpriced stuff from Woolworths).

At the end of the day, settling debt also involves a change in lifestyle, if you wanna get it done sooner, rather than later. Rather sacrifice a few months of going clubbing, even going to the movies, and use that money that would have been spent on the entertainment, to settle the debt. Rather wait a few months before you go an buy those expensive rims for your latest Golf project.

Sacrifice now, in order to reap the benefits later. And remember, once you are out of all that debt, don't fall back into it. Rather buy things with cash, instead of credit cards. Also, reduce the limit on your credit card (or cards), so that you have enough in case of emergencies, however it is always better to have emergency money in cash, in an savings account, which you won't simply touch.

Some people opt for 32 day notice accounts for savings purposes. Yes, you have to give 32 days notice in order to get your money, but at the bank's discretion, you can get your money immediately, at a penalty of say, 1% of the amount you need.

Best advice that i was ever given... Never buy consumer products on credit!!!!!!!!!!!

The only two things that you ever need finance for is a house and maybe a car.... (If your job requires it and you cant buy one immediately otherwise)

A credit card can be used to save money if done wisely and in a disciplined manner... however it is far too easy to fall into huge unnecessary debt with it... If you cant use it to save money effectively(by effectively utilising the interest free period and favourable transaction charges) my advice, CUT IT UP!!!!!!!!!!

If you can source a loan with lower interest rates than you're currently paying to your creditors then it could be worthwhile to do a debt consolidation. (i.e. a house mortgage, second mortgage, or flexi bonds, would be some of thses type of loans). Just dont reduce the amounts that you are currently paying in total to your current creditors. Often ppl take advantage of the fact that a debt consolidation offers a longer period, slightly lower interest rates and hence a smaller repayment. Then they get more debt and just use that available excess cash to pay the new debts, leaving you in a worse situation.

remember that a longer period loan may actually mean you pay more interest even though you have a lesser interest rate due to its term of repayment. (present valuing the money does mean you still save due to the lower rate, but from a cashflow perspective you still have to pay more)
The upside of a longer period loan is that the new credit act prohibits banks from charging excessive penalties for early settlement of loans up to a certain threshold.... use this to your advantage ppl!!!!!! you may be able to negotiate a longer period loan at a lower interest rate and settle it early thus saving you loads of cash.

EDIT:

A debt consolidation implies your ability to obtain a loan which bears an interest rate that is less then the weighted average interest rates of the loans you intend on settling with the single loan.

There are several advantages in Debt Consolidation Loan. First, you lower your interest rate on debt. Second, you only make one payment a month that pays on numerous debts. Third, you can lengthen the amount of time to pay on your consolidated loan, which lowers your monthly payments.


The typical debt consolidation loan is a type of unsecured personal loan where the only collateral that you have to offer the lender is yourself. Debt Consolidation loan shortly means, exchange of one loan for another. Debt Consolidation loan can be taken anytime if you feel you cannot afford your monthly payment. When you have several high interests debt you can consolidate it into one lower, fixed rate loan.

There are two major uses for Loan Consolidations. The first use is Student Loans Consolidation. Consolidating student loan may be a great way to lower your interest rate and allow you only one monthly payment to one lender. The second use is Military Debt Consolidation Loan. These military debt consolidation loan programs will allow you to make monthly payments in a timely manner and will also allow you to take advantage of having an easy budget to maintain.