Dear Customers & Prospective Customers,
In this post today, we want to address the topic on everyone’s mind this week: The Covid-19 Novel Coronavirus.
We are now officially in a state of global pandemic.
The effects of the Coronavirus outbreak — and the measures the New Zealand Government has taken to slow it — reach into every facet of our country’s businesses and communities.
That means the financial markets — and specifically the lending business ecosystem — will be affected by this.
So, allow us to clarify a couple of things.
Firstly…
We are still accepting, processing and settling finance applications across our range of products and services.
As with all Kiwi businesses, we remain vigilant for the wellbeing of our staff and their families.
But at the time of writing, we’re all hands on deck.
Should this change, and mean we are unable to serve our customers at our normal capacity, we will let you know.
Like the rest of the country and world, we are of course monitoring the situation daily and standing by to adhere to Ministry of Health directives.
We will do our best to remain fully operational.
And…
We’ve always prided ourselves in going above and beyond for our customers here at Finance Today.
While there are obviously huge and rapidly changing factors at play right now, we remain focused on matching our customers with the best possible financial solutions from our network of lenders across the country.
The basic conditions we must use to assess loan applications remain the same.
We will always ask for proof of income.
We will never lend to a customer who can’t afford to repay their loan.
Our commitment to responsible lending in line with regulatory requirements and industry standards remains the same, regardless of how severe and prolonged the Coronavirus outbreak becomes.
Should you have any queries regarding the current lending conditions and options available, please feel free to get in touch.
Look after yourself, and each other.
Sincerely,
The Finance Today Team
Posted in Business Loans, Car Finance, Debt Consolidation, Mortgages, Personal Finance
Are you thinking about buying a new car in 2020?
Will you be looking for finance when you do?
Then there’s a few important things you should know before you get the keys to your new vehicle.
The more time and energy you put into understanding the different types of car loans out there (and how the various factors will impact you over the duration of the loan), the better placed you’ll be to get the right vehicle under the right financial conditions.
The AA has some sound advice for those looking to buy a new car on finance.
And Loanplace has some of the best offers available for Kiwis looking for the perfect car loan.
Three Things You Must Understand Before You Sign A Car Finance Deal
The first thing you should work out is how much of your weekly budget you can feasibly afford to commit to making the repayments on your new car loan.
You should never borrow more than you can afford to repay — this especially goes for car finance.
Second, you should know your credit rating. This will help you ensure your loan provider is offering you a fair deal.
Thirdly, it’s vital you take the time understand the structure of the loan you are applying for.
Don’t get caught up in the excitement of buying your new car to the point where you miss important points about the loan agreement.
(Our consultants will always talk straight with you about the loan structure, your repayments and conditions.)
Found The Right Loan? Protect The Car You’re Buying It With.
A car is a vital part of life in New Zealand. But, it’s also prone to many unforeseen circumstances.
Cars break down, people have accidents or have their car stolen…
In some cases your financial situation might change and you may not be able to afford your repayments.
The good news is you can choose a loan provider that offers additional benefits like vehicle insurance, mechanical cover, protection against loss of value and even financial protection that means you won’t be stuck paying off a car you can no longer afford.
Posted in Car Finance
If you’re applying for a loan in New Zealand, it might feel easy to get overwhelmed.
There are a lot of options to consider and different numbers you need to understand.
But rather than just going for the first loan you come across, we encourage you to do a little research before you settle on the loan that’s best for you.
Here’s a quick three-point checklist to refer to when you’re looking for your next loan.
From Bank To ‘Pay Day’ Loans: Understand The Range Of Options
The first thing you’ll learn when you start searching for a loan, is there’s a wide variety of options out there.
Don’t let this overwhelm you — it’s a good thing to have a lot of options.
Many people go to their bank first. This is the traditional place to start.
Banks can give you a good deal. But they can also be slow and inflexible compared to other types of lenders.
Then you have credit unions and peer-to-peer lending options.
And at the other end of the spectrum you have pay day lenders, who aim to give customers quick cash loans at high interest rates.
Your personal financial situation will largely determine which type of lender you wish to deal with.
Finance Today is a broker that works with New Zealand’s leading lenders and matches customers with the best option for them.
Get an instant estimate of how much we could help you borrow.
Choose A Finance Company That Prides Itself On Excellent Customer Service
You might be paying back your loan for several years after you settle on a provider.
So it pays to choose a company that has a great customer service ethic and delivers friendly, professional service.
There’s nothing worse than being bounced around a call center by customer service reps who don’t seem to care whether they help you or not!
So whoever you select to borrow money with, be sure they treat you as a valued customer, that you can contact them easily and that they provide a professional service.
Make Sure Your Loan Provider Or Broker Has A Proven Track Record
This especially goes for small lenders and pay day lenders.
Never borrow money from someone who can’t prove they deliver great results for their customers.
Make sure they clearly state their terms and conditions — and their fees.
And, if possible, choose a finance provider who can substantiate their reputation with verified customer reviews!
We get a lot of people coming to us applying for loans, convinced that they have a bad credit rating.
However, many of these people don’t actually know the truth about their credit rating — or their rights when it comes to checking and correcting it.
So before you go assuming you have a bad credit rating — and therefore need to settle for something like a payday loan when better options may be available to you…
Read this post!
What exactly is your credit rating?
Your ‘credit rating’ is your entire history of financial decisions.
Every time you apply for a loan, a mobile or internet plan, mortgage or credit card, for example, the provider has to check whether or not your history demonstrates you will be able to afford the repayments.
Every time you apply for a financial product or service, the details of that application enter your credit report.
However, your credit rating is only as good as the information New Zealand’s ratings agencies receive about your financial behavior.
You have the power to fix any mistakes in your credit rating
Unfortunately, sometimes the reality is that credit ratings agencies record incorrect information about you.
For example, if you bought a car that the previous owner owed money on, and that debt became your debt (on paper), this could dramatically change your credit rating.
The good news is that you have the right to make corrections to your credit rating — and it is easy to do so.
You can request your own credit report at any time and make corrections via the reporting agency you deal with.
It makes sense to ensure your credit rating is accurate and not carrying any incorrect financial information about you BEFORE you apply for a loan.
Don’t just assume you have bad credit
Jumping to conclusions about your credit rating before knowing the facts could lead you to accept a less-than-ideal loan.
Checking your credit rating — and making corrections to it — is both free and easy.
We encourage you to do so before applying for any loan, because your credit rating impacts:
If you have any questions don’t hesitate to get in touch with us.
Along with all the amazing customers we deal with week to week here at Finance Today, we always receive more than our fair share of hate mail.
So today, we thought we’d take a little time to address a few of the recent accusations that have popped up on our social media pages.
There’s clearly a lot of Kiwis out there who don’t understand the realities of personal finance and debt consolidation… or who believe anyone who lends money is automatically a “loan shark” who’s out to get you.
The truth about Loan Place is a lot simpler and a less scary than that.
So let’s look at a few recent accusations we’ve seen.
Accusation: It’s A Scam
Truth: Hundreds Of Happy Customers Prove That’s Not The Case
As you’ll see in our post about responsible lending, we actually turn down a LOT more finance applications than we approve.
Why?
Because our mission is to help everyday people get finance solutions that will improve their financial position.
For most applicants, getting a loan is not the best option.
Naturally, some people get angry when we turn them down for a loan.
There are literally hundreds of Finance Today customers who’ve come to us for personal loans, car loans, business loans and debt consolidation…
…and who have been thoroughly impressed by our service and the solution we helped them find.
In other words, our growing community of happy, loyal Finance Today customers is living proof our business is not a scam.
Accusation: ‘Mature People’ Don’t Consolidate Debt
Truth: Consolidating Debt Is Often The First Step To Repairing Your Financial Position
One comment we saw recently concerned our debt consolidation service.
The gist was this: Taking one loan to pay off another loan doesn’t make sense.
Now, that might be true, IF you took a new loan to pay another at the same — or higher — interest rate.
But if you have multiple loans and the average interest rate across those loans is, for example, 25%…
Then you would be in a much better position if you took a debt consolidation loan and dropped the interest rate to, say, 19%.
It’s simple maths.
We wouldn’t offer debt consolidation to our customers if it didn’t help them improve their financial situation.
Accusation: ‘Be Careful Of The Broker Fee’
Truth: Our Consultants Work Tirelessly To Find Great Finance Solutions, Tailored Specifically To Our Customers
One way to think of Finance Today is like an air travel aggregator website for finance.
We don’t lend money ourselves. We broker finance agreements on behalf of our customers using our working relationships with multiple lenders across the country.
We do charge a modest broker fee to provide this service. We have never and will never hide this simple fact of our business model.
While some people online seem to think we are ‘working for third parties’, the truth is we are working for our customers.
Our consultants work one-on-one with each of our customers to match their specific situation and goals to the right loan from the right lender.
We are proud to provide this service to everyday Kiwis.
If you have any questions about our business or the services we provide, don’t hesitate to get in touch with us
This week on the Finance Today blog, we’re pulling back the curtain on three real-life success stories.
When people apply for a loan with us, no matter whether it’s a small loan or finance for a major purchase, our aim is always the same:
We want to help our customers improve their long-term financial situation by access fast, fair finance solutions that suit their specific needs and background.
And we’re pleased to be able to share with you today three stories of customers we’ve proudly served in the past few months.
These are everyday Kiwis who found us online, applied for a loan and worked with one of our dedicated consultants to find a solution that would allow them to borrow the right amount of money under the right conditions.
See for yourself!
(We’ve changed their names to protect their privacy.)
From Out of Business to Making $40,000 a Month
Rob is a business owner who unfortunately had to deal with the failure and closure of his business.
Not long after though, he got the opportunity to become an ‘owner driver’ for a container transport freight company.
The only hitch was that he had to find $140,000 to buy his own truck and trailer before he could get started.
How could Rob possibly go from dealing with a collapsed business to finding that much money to start work with the new firm?
He called us.
We quickly analyzed Rob’s situation and income potential, and helped him obtain a loan for the new truck.
Rob only had to provide a small deposit and use the truck as security on the loan.
He’s now up and running with his new small business, generating $40,000 a month in revenue.
Mortgage Cleared and Property Project Complete!
Damian had been building a house in Queenstown over the past couple of years but had gone over budget (as building projects often do) and found himself $100,000 away from finishing.
Because he was self-employed, the banks required two years’ worth of financial statements in order to lend Damian the funds he needed to complete his new building.
Luckily for him, Damian found Finance Today.
We were able to help him arrange a $780,000 mortgage refinance that cleared the existing mortgage and advanced him the funds to finish the project.
Today, the building is complete and Damian recently rented it to his first tenants.
A $50,000 Loan Facility Approved in Just 2 Hours
Janet runs a food truck company. Business had been going well, so she was looking to expand her fleet and buy a late model Isuzu to help serve more customers.
She started looking around for a lender to help her finance the new truck.
Unfortunately, Janet had difficulty proving a stable income and found that most lenders deemed her to be a high risk customers (she already had multiple trucks on finance).
But when she spoke with us, we dove a little deeper into her situation.
As a property owner who’d be running a successful business for 10 years, Janet was not the high risk our competitors told her she was.
In just two hours, we had approved a $50,000 loan for Janet’s new truck.
Her business is now growing even more successful and she’s thinking about working with us again to finance another truck!
There you have it.
These are just three of the hundreds of success stories we’ve shared with everyday Kiwis here at Finance Today.
If you have any questions about obtaining fast, fair finance, we’re happy to help.
One of the things some like to claim is that you are better off going to the bank for a loan than applying with us.
We thought it would be helpful for those considering applying for finance with Loanplace to get the facts straight first.
We’re a New Zealand Government Registered Financial Services Provider.
We have thousands of satisfied customers who’ve borrowed amounts from just a few thousand dollars up to several thousands, for reasons ranging from debt consolidation and home improvements to buying a new car or going on a much-needed holiday.
If you don’t want to take our word for it (we are, of course, biased), then read some of our hundreds of independently verified reviews.
We’re Agile: We Can Quickly Approve Loans Large And Small
The biggest advantage we have over the banks is that we are an impartial business that has strong working relationships with multiple finance companies in New Zealand.
That means we can match your application with the best lender based on your individual situation.
A bank, on the other hand, is only interested in lending you money itself — even if there’s a better option out there.
One of the best things about being a small, independent business is we can offer our customers great flexibility — often more so than the banks.
While applying for a loan through a major bank can require large amounts of paperwork, we pride ourselves on offering customers a quick, user-friendly online application that only requires you prove your income using our secure online portal.
Another advantage we offer our clients is our lightning-quick response and approval times.
If you apply for finance with a bank, you can sometimes expect to wait days for a result.
At Loanplace, our quick-and-easy online application process means we can process, approve and settle your loan within just two hours (that’s best-case scenario, of course — some applications are more complex and we rely on our customers providing their information quickly in order to deliver a fast service).
So while we are small and independent, we are not looking to scam anybody — just deliver fast, fair service.
We’re 100% Legit (And Fully Capable Of Beating The Banks’ Interest Rates)
Loanplace is a New Zealand Government Registered Financial Services Provider.
We’re in business to help everyday kiwis get access to fast, fair finance with friendly, one-on-one service.
We deliver our service via our website and our hand-picked team of consultants here at our office in Christchurch.
We’re also fully committed to responsible lending. Because we believe in only lending money to those who can afford to pay it back, plain and simple.
Our team assesses each loan application fair and square.
The interest rate we offer our customers is always directly in line with the information they provide in their application and their credit history.
While the banks tend not to offer interest rates on loans lower than 13.95%, we’re able to beat that by about 5%.
If you have a particular question you’d like to ask us, we’d love to help!
Thinking about buying a new car? Awesome.
Planning to borrow money to do so?
Don’t sign anything without reading this article.
Lots of Kiwis will buy their next new (or used) car from a dealer.
You’ll head to the car yard, test drive a few vehicles, then enter into the classic conversation with the car dealer where you start talking about warranty, registration and price.
Most car yards in New Zealand will — conveniently — offer you the chance to buy your new car on finance.
They’ll even advertise their vehicles in terms of “from $XX a week”, instead of actually telling you the true price of the vehicle.
Now, when you’re on the spot, standing next to the car you’ve had your eye on and the dealer is next to you offering to do the paperwork there and then…
It’s important to stop and consider whether this seemingly convenient option is, in fact, the best and most financially sensible for you.
While most people will jump at the chance to get in the car and drive it out of the dealer’s yard, the reality is you probably aren’t being offered a great finance deal.
How To Get The Upper Hand When Negotiating To Buy A New Car
The reality is that some car dealers are experts at confusing prospective buyers into forgetting the true value of a car and signing up to a less-than-great finance deal just so they can drive it out of the yard the same day.
There is one major thing you can do — without spending a cent — to give yourself a better chance of negotiating a fair deal with the seller and not get taken advantage of.
What is it?
Simple: Get a quote or pre-approved car finance application for the amount you’re willing to pay for the vehicle.
(You can do that with Finance Today right here, by the way.)
This gives you a strong idea of how much the loan should cost you based on your budget and credit score.
If the car dealer tries to talk you into a deal that offers you less value or costs you more money than your pre-approved application shows, you’ll know they’re potentially looking to take advantage of you.
Make Sure You Protect The New Car You’re Borrowing Money To Buy
If you’re borrowing to buy a new car, there’s another thing you must consider before taking an on-the-spot finance deal from a car dealer.
As soon as you buy a new car, you’re taking on a set of liabilities — things that might end up costing you money as you use the vehicle.
It’s worth considering whether the finance deal you opt for offers you any protection for things that might pop up in the future.
Don’t let a car dealer sweet talk you into taking an average car loan just so you can drive away on the day.
Make sure you get a deal that delivers maximum protection.
Obviously, we wouldn’t be telling you this if we didn’t offer that type of additional protection here at Finance Today.
When we work with our customers on creating the perfect car finance deal for them, we’re able to offer a range of bonus services, such as:
Protects your new car against fire, theft and collisions no matter whether you hit something or the unexpected happens.
Full breakdown and repair insurance to cover you if you need to pay for towing or mechanical work.
Stops you from having to make big repayments on a car that’s no longer worth what you paid for it.
Cover yourself in case employment or family events prevent you from being able to make your car loan repayments.
Is your car dealer offering you any of those options? Ask them. If not, why not?
We encourage you to do your research, understand your credit score and ideally approach buying a new car with a pre-approved finance application to stop sellers trying to take advantage and keep the real value of the vehicle hidden behind confusing finance deals.
Our team are experts on the ins and outs of car finance — meaning we know ALL the tricks other lenders will try to use to get you to take a loan that might not be ideal for your situation.
When we talk about your ‘credit rating’, we’re talking about your entire history of financial decisions.
That might sound scary, but it doesn’t have to be.
See, every time you apply for a loan, a mobile or internet plan, mortgage or credit card, for example, the provider has to check whether or not your history demonstrates you will be able to afford the payments.
Your credit rating is the sum total of your applications and the rate of success or failure you have had in both obtaining and repaying loans.
This means that every time you apply for finance, you’re not really going up against some big bad company who doesn’t want to lend you money.
Really, you’re going up against your own financial past.
If your credit rating reflects a long history of successful applications and diligent repayments, you’ll generally stand a higher chance of succeeding with new applications.
But, if you have a long history of missing payments or being chased by debt collectors, for example, chances are you’ll find it more difficult.
Simple Ways To Protect & Improve Your Credit Rating
If you already have a good credit rating and you want to keep it that way, here’s three things to keep in mind.
Keep on top of all your accounts: Whether it’s your mobile phone, your Sky account, broadband connection or home utilities accounts, make sure you stay up to date with payments.
This shows the credit rating agencies that you can be relied on to meet your payment obligations.
Minimize your debt: OK, we know sometimes you have to borrow to improve or stabilize your financial position.
But think carefully before you borrow.
The more debt you have to your name, the riskier you might seem to potential future lenders, because this debt will show up in your credit rating.
Show stable income and living arrangements: The longer you’ve been earning income from a job, and the longer you’ve owned or rented your home, the more likely your credit rating will demonstrate stability and reliability — two things which finance companies like to see when assessing a loan application.
Common Pitfalls That Can Damage Your Rating And Make It More Difficult To Get A Loan
At Finance Today, we see a LOT of finance applications. Time and time again, we see people making the same mistakes and costing themselves the chance to secure a loan at a good interest rate.
Here’s three things to avoid if you’re looking to build a good credit rating:
Applying for heaps of loans: This is important. You don’t have to obtain a loan for your credit rating to change, you only need apply.
There’s no sense applying for 10 loans in a single day when each company you apply for can see you’re applying to the nine others.
The better option is to do your research and apply for one loan, not many.
Accepting payday loans: These high interest, short-term loans are sometimes necessary for those trying to alleviate urgent financial problems.
But the reality is that accepting a high interest loan like this demonstrates to credit rating agencies that you may be in financial hardship — making it tougher to get accepted next time you need finance.
Gambling before applying for finance: Successful loan applications require proving your income and financial behavior via bank statements.
Lenders will look for evidence of gambling.
This can negatively impact your chances of getting approved, because lenders ideally want to give you finance to improve your financial situation, not make it worse.
Posted in Car Finance, Debt Consolidation, Mortgages, Personal Finance
Chances are in the past couple of months you’ve seen or heard some rather scary stories about so-called ‘pay day lenders’.
TV news and social media ran stories in June about how the Commerce Commission is taking one business to the High Court of New Zealand over allegations of irresponsible lending.
Naturally, the story has caused everyday Kiwis to pay attention to this business, and others like it.
If the story worries you…
Or makes you second guess whether it’s smart or safe to borrow money in New Zealand right now…
Good.
Because here at Loanplace we think the more educated and aware you are about borrowing money, the better.
The better it is for you, for businesses lending money… for the whole industry.
So, in this brief post, we’re going to address a few important points.
The point isn’t to sell you anything (though of course our business is providing fair finance to everyday Kiwis — more on that here).
Our objective here is to explain what’s going on with the Commerce Commission’s case… and show why the kind of lending practices they are aiming to crack down on are, in fact, bad for everybody in the finance industry.
‘Finance Company’ Does Not Equal ‘Pay Day Lender’
547.5%.
That’s the interest rate some people have been agreeing to when they’ve taken on what’s known as a ‘pay day loan’.
If someone is in the position where they need to borrow money at an interest rate that high… how can they reasonably be expected to repay more than SIX TIMES that much money?
It’s pretty basic.
If you find a lender offering money at an interest rate like that, you must understand the repayment demands.
For now, this sort of thing isn’t illegal. That’s probably going to change very soon.
But in the meantime, we advise you not to accept any loans at interest rates that could make your financial situation worse, not better.
(Loanplace doesn’t ever approve a loan with an interest rate higher than 25%.)
Why We’re HAPPY There Are People Complaining About Us Online…
If you look around our social media pages, you’ll find people commenting that Loanplace is “a scam” and complaining that we’re discriminating against people by not lending money to those who don’t have enough income or assets.
This is criticism we’re happy to have.
Here’s why.
Loanplace exists to provide fair finance to everyday Kiwis with friendly, fast and personal service.
We aren’t here to arrange finance for people who can’t afford it…
Whose financial situation means a loan would actually hurt rather than help them…
Or to force those who don’t understand the rules of borrowing money to pay back four, five or six times the amount they borrowed.
In other words…
We feel it’s far better to have people complaining that we won’t approve their finance application that to have customers who can’t afford to make the repayments on their loan.
If A Loan Is Bad For You, It’s Ultimately Bad For The Business You Borrow From
A high interest loan that takes you years to repay and potentially damages your credit rating is, obviously, not the most sensible option.
But it’s not just bad for you if you can’t afford to pay it back.
It’s actually bad — over the long term — for the business who lends you the money.
Think about it.
If a business approves loans for 100 customers and only, say, 10 of those customers actually manage to repay it, then the business is in trouble.
This is why you find companies like those the Commerce Commission is targeting charging massive interest rates — they’re trying to cover their costs and protect themselves from customers failing to pay their loans back.
To us, that’s a pretty bad business model.
Not just because it puts customers in financial difficulty.
But because it creates uncertainty and unsustainable conditions for the business.
Our model is different.
We only approve loans for customers who understand their repayment obligations and have a reasonable chance of paying back their loan without entering significant financial hardship.
Our team of professional finance consultants don’t approve loans for everyone (see the complaints on our Facebook page).
In fact, we’re so serious about providing fair service to our customers and creating a sustainable business that we’ve invested in creating proprietary software that allows our team to accurately determine whether it’s sensible to offer a loan to a customer.
We also specialize in debt consolidation.
This involves looking at our customers’ existing loans and repackaging them into one debt at a lower interest rate.
In other words, we believe that what’s in our customers’ interests is in our interest (and that insanely high interest rates are not good for you OR us in the long term).
So, if you’ve seen the stories about the Commerce Commission’s case against ‘pay day’ lending in New Zealand…
And that’s made you think carefully about the rules and realities of borrowing money…
Great!
We encourage all our customers to familiarize themselves with the conditions under which they borrow money from any third party.
For more information, please check out this article about Responsible Lending: https://www.consumer.org.nz/articles/responsible-lending
Sources:
https://www.tvnz.co.nz/one-news/new-zealand/moolas-alleged-interest-rate-breaches-shows-system-not-working-like-should-finance-expert
https://www.nzherald.co.nz/personal-finance/news/article.cfm?c_id=12&objectid=12247594
Did you know you can get finance to purchase cars privately!? This means you can buy a car off TradeMe, off a friend, or even off the side of the road just like you would at a car dealer.
This gives you the power to find the exact car you want at a much lower price than you might find at a dealer.
Not at all! Finance companies are happy to lend you money for a car no matter if it is from a registered car dealer or for a private sale.
The conditions are the same however… The car must be fairly new, usually less than 5-10 years old and you must get full insurance for the vehicle.
This is actually a lot easier than it sounds. Usually the whole process is the following 4 steps:
That’s it!
Here at Finance Today, vehicle finance is our specialty. We have access to several Finance Companies and can get you rates that no one else can.
Our team will guide you through the entire process from getting approved for finance, right up to picking up your new car.
With decades of combined experience in the vehicle industry, we can provide you with advice on vehicles, insurance for the vehicle and getting you the best deal possible.
Posted in Car Finance, Personal Finance
Often in life you can find yourself in a bit of a pickle when it comes to money. Maybe some unexpected bills came up that you were not prepared for. Perhaps you needed to buy a car to get to work. Whatever the reason, it happens, and there are a few things you can do to help get yourself into a better situation fast!
If you have multiple debts, say a credit card, a hire purchase and an overdraft, it is important to pay these off in the correct order so that you can get out of debt fast and save the most money.
So the first thing to do is find out what the interest rates are on each of your debts. Often credit cards or payday loans are going to be the one with the highest rate.
Now you have figured out the highest rate debt, you need to pay off as much as you can each month rather than just the minimum payment. The reason for this, is everyday interest is calculated on your debt, so the lower the amount of debt on each day, the less interest you will be charged.
In the long run, this means you end up paying the debt off faster and also it costs you less because you are paying less interest.
Did you know that different credit card providers offer an interest free period when you transfer the balance of a credit card from another bank to them?
Often the big banks have a 6 month or even a 12 month interest free period when you transfer the balance. That means on a credit card debt of $5000 at an interest rate of 19.95% you would save nearly $500 over a 6 month interest free period.
Now of course this only helps you if once you transfer the balance, you pay off as much as you can each month. Don’t just pay the minimum amount. This is to drop the balance as much as possible while in the interest free period.
If you get to the end of the interest free period and still owe money, nothing is stopping you from doing another balance transfer to a different bank to take advantage of another interest free period.
Another option is to get a ‘Debt Consolidation’ loan, which brings all your debts together into a single, easy to manage repayment.
Often this winds up to be the most manageable solution for someone with many debts, as it makes the monthly repayment much smaller and can often be at a lower average interest rate.
