Pros and Cons of Using a Debt Review in South Africa
Unmanageable debt may take over your life, leaving you feeling lonely, alone, and helpless.
Considering a debt review program? Wondering what’s in it for you?
A debt review in South Africa helps you pay off debt in a way that’s easier to you, providing many benefits you might not have otherwise.
Advantages of Debit Review in South Africa
You Simply Have to Pay One Payment Every Month.
You won’t have to worry about paying multiple payments each month if you choose a debt management plan.
Instead, you’ll just have to pay your credit counseling agency once.
The credit counseling firm will subsequently make the payments on your behalf to the creditors.
This is especially helpful if you have a lot of accounts to manage or if you have trouble remembering due dates.
You won’t have to juggle a complicated payment calendar or deal with the stress of late fines with just one monthly payment.
You can relax for the rest of the month as long as you make your credit counseling agency payment on schedule.
Loan With a Cheaper Interest Rate.
Your credit counselor will try to negotiate reduced interest rates on your behalf as part of your debt management strategy.
High interest rates on credit cards and other unsecured loans can dramatically increase your monthly expenses.
Fortunately, the opposite is also true.
Interest rates that are lower generally equate to lower monthly payments.
Pay Off Your Debt Faster
Most consumers who use a debt management plan pay off their debts in three to five years thanks to negotiated conditions and lower interest rates.
You will be able to save money on payments if the interest rate is lower, and more of your payment will be allocated to the principle debt.
As a result, you may be able to pay down your debt even more quickly.
Credit Score Increase Over Time
Although there is no guarantee that debt counseling will boost your credit score, debt review clients typically notice a 62-point increase in their scores after two years.
This is likely due to the fact that a debt review makes it easier to maintain consistency and swiftly reduce debt, both of which are essential criteria in your credit score.
Disadvantages of Debit Review.
Termination Of Credit Cards
You must close any credit cards that are part of your debt management plan.
This ensures that you do not incur additional debt while repaying your current loan.
It also guarantees that you’re making the most of the lower interest rate and debt management plan benefits.
Even if you have a credit card that isn’t part of your debt management plan, you should avoid using it until absolutely necessary.
Your creditors who are part of your debt management plan can keep track of your spending.
They may ask you to close the account if they find additional debt.
Make Consistent Payments
You must make regular monthly payments to preserve the benefits of your debt management plan—lower interest rate, fewer monthly payments, and more.
You might lose the benefits if you don’t.
Debt management plans are most effective for persons who are serious about making a financial adjustment and intend to keep their half of the bargain.
Not All Creditors Participate
Some creditors refuse to participate in debt review programs, despite the fact that the majority do.
Although your credit counseling organization will negotiate on your behalf to obtain the best terms, the creditor is ultimately in charge of determining the conditions and perks.
Although it is uncommon, one or more of your creditors may decline to engage in a debt management plan, and in that case, a debt management plan may not be the best choice.
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