By consolidating the debt you can extend the period of your repayments thereby lowering the monthly repayment amount. However, you need to remember that by extending the repayment period you will increase your total interest payment and there are also administration costs, so it is not wise to use debt consolidation purely as a “convenience”.
If you cannot afford your existing monthly repayments debt consolidation would be a good option. You are probably paying 24% on your credit cards and around 32% on your personal loan. By taking up a consolidation loan with FNB, the following will apply:
- The best rate you likely to pay would be around 11%, and the highest 32%. This depends on your risk profile.
- You will probably need to take Credit Life cover. Rates start at around R3 per R1000 so if you took a loan of R70 000 the premium would be at least R210 p.m.
- You will have a monthly service fee of around R57 p.m.
- You could be charged an initiation fee of R1140.
Consolidating your debt allows you to pay a manageable installment and enjoy the following benefits:
- Fewer loans to pay
- Less installments making repayment easier to manage
The benefits of getting a FNB Debt Consolidation loan include your loan payments becoming easier to manage as you have only one loan to pay-off. Another benefit is that you will save time and money on administration fees, interest and debit orders. With FNB Debt Consolidation you can save up to 20% of your money. On the list of benefits you also benefit by being in safe hands on FNB as it is one of the most reputable banks in South Africa.