If there is one thing that is stopping our people from achieving home ownership, it is short-term debts. It doesn’t help that a lot of finance companies make it fairly easy to access these funds.
When I say short term debts, I mean:
- Personal loans from banks and finance companies
- Store cards (Q or Gem Visa etc)
- Credit cards
- Car loans
- Hire purchases
More often than not, we go to whoever can make the process easy and hassle free. Generally, this means you will pay a higher interest rate and pay more fees.
Here is an example of how the interest rate affects how much you end up paying:
| Loan Amount | Interest Rate | Loan Term | Weekly Payment | Total Interest | Total loan Paid after 3yrs |
|---|---|---|---|---|---|
| $15,000 | 29.00% | 3 Yrs | $144 | $7,499 | $22,499 |
| $15,000 | 23.00% | 3 Yrs | $133 | $5,797 | $20,797 |
| $15,000 | 18.95% | 3 Yrs | $126 | $4692 | $19,692 |
If you add in what you are paying for credit cards and hire purchases, the costs rise and you end up with less funds for other living expenses.
This is where a debt consolidation loan will come in handy. Combine all your debts into one loan; so that it becomes easier to manage and if you find the right lender, you will also be able to save money.
