Debt consolidation loan: Helps you start life afresh!
You payments are mounting. You don't know what you can do to pay
off those mounting bills. Also, excessive spending and
cumbersome financial responsibilities are slowly taking you to
bankruptcy.
More and more people are now beginning to look at different
alternatives to manage their debts. Debt consolidation programs
help consumers to get rid of the burden of excessive debt. Debt
consolidation experts can help consumers to assess their
individual situation and give recommendations on how to get out
of their tough situations.
Availing a Debt consolidation loan is an easy task. All it
takes is a few simple clicks.
A consumer needs to be honest about the situation and willing
to work with creditors. Hiding things will not help the consumer
get back on track. While filing for bankruptcy may sound like an
easy way out, this is not necessarily true. The damage to your
credit score and your credit report is worse. A better
alternative to bankruptcy is to work out a plan to get yourself
out of that big pile of debt. The name of the plan is debt
consolidation.
Paying off debt is a learning process that will help you gain
more financial freedom in the long run. But before you take the
plunge, you must first familiarise yourself with the pros and
cons of taking a debt consolidation loan.
The pros:
Single payment: Making a single payment is much easier
than figuring out how much to pay to whom and also when.
Reduced interest rates: In case of a secured deal, you
get reduced interest rates. However, if the loan is unsecured
you typically have a higher interest rate.
Lower monthly payments: Since the interest rate is
lower and because you have only one payment vs. many, the amount
you have to pay per month is decreases significantly.
Only one creditor: This simply curbs you finances as in
this case you have to deal with only one creditor.
Rebuild your credit: The biggest advantage of a Debt Consolidation Loan is that it
lets you start life afresh. You can use this loan to repair your
credit.
Isn't it great, but! Before you run out and get a loan, let's
look at the other side of the coin - the cons
The cons:
Mount on further debt: With an easier load to bear and
more money left at the end of the month, your continuing
spending habits may lead you to more debts.
Longer time to pay off: Most loans are lent for a
period of 5 to 25 years. This means that rather than spending a
couple of years getting out of debt, you will end up spending
the entire length of your life getting out of debt.
You can lose everything: If you avail a secured debt
consolidation loan and fail to pay it back, then you can
actually end up losing your home. This is because secured loans
require some collateral to be pledged against the loan.
Remember to weigh both the positives and negatives before
availing a debt consolidation loan.