Debt Consolidation

What is debt Consolidation?

Debt Consolidation is the act of borrowing one big lump sum of money and using this lump sum to settle your other multiple debts owed to multiple creditors.

Who should consolidate their debt?

NB! It is important to consult experts for credit counselling and get the best solutions for your debts before deciding to consolidate it. The following groups of people should consider consolidating their debt:
  • People who have a lot of short-term (payable in three years of less) debt.
  • People who struggle to keep up with the number of people they owe money to and as a result, forget to pay some of their creditors.
  • People who pay a lot of transacting fees, late payment penalties and interest.
  • People who prefer to reduce their monthly costs by moving their repayment periods from short to long-term.
  • People who have to put up with a lot of harassing creditors.
  • People who are committed to building good credit records.

What debt should you consolidate?

  • You should consolidate all short-term high interest bearing debt such as:
    • Credit Cards
    • Store Cards
    • Unsecured personal short-term loans
    • Car loans
    • Student loans
  • The interest rate on the above can range from 9% to 64% and consolidating it into a facility that attracts a predictable 12% – 17% might help you.
WARNING: By consolidating the above debts into one home loan package you are moving short-term debt into long-term debt. It is strongly advised, that you continue to repay the same amounts that you have been paying on all your current debt into your new increased home loan account. This will enable you to pay off your debt faster and far cheaper.

Why do people consolidate their debt?

  • The main reason why people choose to consolidate their debt is that it enables them to worry only about one big debt, instead of worrying about many small, medium and large short-term debts.
  • Being concerned about only one debt gives you peace of mind. You don’t have to worry about a hundred creditors calling you, there’s no worrying about forgetting to pay one or two of your accounts and it saves you time and money spent running around paying creditors.
  • People can convert their high interest debt into low interest debt by negotiating their interest rates with the Bank when they consolidate their debt.
  • There are no late payment penalties, legal fees or multiple debit orders going through your account, which will lessen your transacting costs.
  • Consolidation often means moving your debt from short-term high interest bearing debt to long-term low interest debt, which saves you money on interest charges and unlocks your cash flow as the debt can be repaid over an elongated period of time.
Prime Interest Rate: 9.00%


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