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SolveYourProblem.com
Article Series: Debt Relief & Debt Consolidation
I Want To Get
Rid Of My Debt...NOW!
Should
I Get a Debt Consolidation Loan?
If you’ve got a really unmanageable amount
of credit card debt, you might be considering a consolidation
loan. A consolidation loan is a loan that you can use
to pay off all your debts, meaning that you can pay them off for less
money without having to worry about lots of different bills.
Like anything, though, consolidation loans have their advantages
and their disadvantages, and it pays to take a careful look
at what they offer before you commit yourself.
The Interest Rate.
You should always shop around to get the best interest rate
you can if you opt for debt consolidation. This interest
rate is almost as important as the one on your mortgage, but much
harder to change after you’ve signed on the dotted line. Don’t
be fooled by any offers that give you a good rate for a limited
time – you’re going to have this loan for quite a while.
That said, the chances are that any interest rate you’re offered
on a debt consolidation loan will be significantly lower than
the interest rates you’re currently paying on credit cards.
If you have a lot of cards at a high rate and you’ve had no
luck transferring the balances, then debt consolidation could
be a very good idea.
The Length of the Loan.
The most dangerous thing about debt consolidation loans is
that the ones with lower payments generally last a very long
time – you could be paying it off for twenty years, or even
longer. You should try to find a loan that doesn’t last as
long, and asks for payments that are as much as you can afford.
If you look at what your payments would be and think ‘oh, how
cheap!’, the chances are you’d be signing up to them for a
long time to come.
Look Out for More Cards.
One of the most dangerous things about getting a debt consolidation
loan is that, since your credit cards have all been paid off,
it can be tempting to accept the next few offers you get for
new ones. After all, now you’re saving all this money, you
can afford a few more cards, can’t you? Don’t fall into this
trap! Consolidating your debt and then running up more is an
extremely bad idea.
You Could Lose Your Home.
Of course, this is the absolute number one most dangerous
thing about debt consolidation. Almost without exception, the
loan will be secured on your home. That means that if you start
missing payments, the finance company will kick you out, take
(‘repossess’) your house, sell it, and pay back the debt with
that money.
There’s a whole industry around property developers buying
repossessed houses and selling them on for a profit. The chances
are that you’ll come out of it with nowhere near enough money
left to buy even the smallest home, and nowhere to live. Just
imagine that. If you do take a debt consolidation loan, you
need to read the small print as if your life depended on it
(it does), and then be very, very careful. Good luck.
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by SolveYourProblem.com
: 2006
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