There has always been a misunderstanding about the difference between debt review and a debt consolidation loan as many believe these two products are the same. In fact these two products are very different and the one will leave you worse off than before….
When it comes to being in debt, many people are looking for the fastest and easiest way to get out of it BUT are you actually getting the help you need?
Here we will outline the two most sought-after debt relief options to help you make the right decision for you and your family’s financial needs.
Debt Review
The National Credit Act (NCA) introduced the Debt Review process to South Africans in 2007 simply to help those who are struggling to meet their monthly financial obligations to their creditors.
Debt review is a legal solution to your debt problems. This product protects you from your creditors and protects your assets like your vehicle and home.
The Debt Review process has been extremely successful in getting people out of debt while taking into consideration your day to day living expenses. We do this by creating a comprehensive budget for you that ensures your living expenses are covered without having to take out any more debt.
What are the benefits of going under Debt Review?
• There is no limit to how much debt can be placed under Debt review.
• You and your assets are protected from your creditors by way of a court order.
• You will no longer get harassed by your creditors for payment. Your debt counsellor will deal with these calls.
• Your monthly installment and interest rates are reduced in accordance with your affordability.
• Your debt counsellor will create a monthly budget for you with suggestions on ways to save money and cut costs. These suggestions will help you live comfortably each and every month.
• You will only pay one installment per month for all your debt which will essentially relieve the financial stress you find yourself in.
• You will have peace of mind knowing that your debt is being paid each and every month while you enjoy financial freedom you deserve.
• Once all your debt is paid in full, you will receive a clearance certificate which is also sent to all relevant credit bureaus and the National Credit Regulator (NCR).
There are so many benefits to being under Debt review and those above are just to name a few. You can always contact D&R Incorporated to find out how we can help you and the total benefits to being under Debt Review.
Debt Consolidation Loan
A Debt consolidation loan is a process whereby the credit provider will pay off multiple accounts with a new loan.
This new loan will leave you in a worse position than before for these reasons:
• This loan only covers unsecured debt such as personal loans, credit cards and store accounts.
• The interest rate is much higher and you will basically be paying interest on interest.
• With your current debt you would have already paid off the admin fees and by taking out a consolidation loan you will need to pay new Admin fees.
• Your debt is doubled.
Although a consolidation loan offers you one installment per month, your debt problem is not solved. You might be paying a lower monthly installment per month but with the high interest rates involved with a consolidation loan you will end up paying more over time which extends your debt crisis.
- One instalment – determined by credit provider.
- Attracts all costs and interest as per maximums allowed by the NCA.
- Initial debt is doubled.
- No legal protection.
- One instalment – determined by your affordability.
- Interest and repayments are reduced.
- You only pay your initial debt.
- Your assets and income are legally protected by court order.
Consumers who take consolidation loans, in most cases, end up applying for Debt review anyway as they are unable to manage the monthly repayment of the loan and end up taking further debt to make it through the month. So don’t fall for their selling trap which is “Only one installment!” Make sure you know all the hidden clauses which are the admin charges, interest rates, term of loan, actual total repayment and total amount of debt that has to be paid.
D&R Incorporated prides itself in providing the best debt solution to our clients and Debt Review will help you see the light at the end of the tunnel. Our team consists of experts in negotiation and will make sure you get the best possible installment based on your affordability.
