A debt consolidation loan is one of the most common debt management solutions that can help reduce your debt. However, a debt consolidation loan is not for everyone and we recommend that you speak with one of the financial planners at Intellichoice first to see if this debt management solution suits your needs.

Before you decide to get a debt consolidation loan, read the tips below to give you a better understanding on how it works and whether it is the right choice for you.

Tip 1: Know the actual cost of paying off your debts

Many people make the common mistake of not knowing the full costs they need to pay with a debt consolidation loan. They simply pick a debt consolidation loan without taking into consideration the interest rates, repayments and other fees. We strongly recommend that before taking out a debt consolidation loan, you compare different quotes and the terms and conditions.

There are many debt consolidation loans available, but not all the consolidation loans will suit your current financial situation. You will need to take the time to research and compare the various consolidation loans and carefully review their terms and conditions. We recommend that you speak with a qualified financial planner at Intellichoice, who will do all the research and comparisons for you. They will go through the features of a debt consolidation loan and advise you whether this product is ideal for your needs and situation. You may be able to save thousands of dollars in the long run just by making the right decision about the consolidation loan you pick.

Although a debt consolidation loan is the most common solution to help manage debt, it may not be the best solution for you. Unfortunately, many people make the decision to get a debt consolidation loan without further exploration of other debt relief solutions that may better suit their current financial circumstances.

Before you get a debt consolidation loan, you need to explore other options for debt relief and compare which one best suits your needs. If you need professional help to analysis your current financial situation, we recommend that you contact a consumer credit counseling service, or speak to one of the qualified financial planners at Intellichoice. In addition to debt management solutions, Intellichoice can assist with budgeting and putting a savings plan in place to help you get back on track.

Tip 3: Don't be trapped back into debt

Debt consolidation involves consolidating all of your debt into the one loan, so you must keep reminding yourself that you are not debt free yet - you have just transferred all your debt into a debt consolidation loan that you still need to repay on a monthly basis.

Many people forget this point and start to use their credit card again for purchases and only pay the minimum monthly due. Their debt will continue to pile up again and the whole cycle starts again. Don't let yourself get trapped into overwhelming debt again while you are working hard to pay off your debt consolidation loan. Your Intellichoice financial planner can help set a budget or savings plan in place. 

Debt consolidation is a solution to get rid of your debt but you need to help yourself prevent future debt. You know that your current spending habit has dragged you into a debt problem and you are lucky that a debt consolidation loan helps. But, if you still continue with your regular spending habit, soon or later, you will be back in the same debt cycle again. You should control your spending by setting up a budget and make sure that you are spending within your capability.

Use our budget planner or speak to one of our financial planners on 1300 55 10 45 for tips on saving, budgeting and debt management.