Written by Jennifer S. Is A “Debt Consolidation Loan” Right for You
Are you looking for a Debt Consolidation Loan? If yes, then it can possibly be the best option to get you out of debt. While this statement is true but the correct question is – is debt consolidation loan the right answer to your debt problems?
Debt consolidation loan is very helpful if you have the right financial discipline. As well as there are a few things that you should consider while taking a debt consolidation loan. If you do not take the appropriate measures, then it can possibly multiply your debts problems. Take it from the right lender, else beware of the high interest rates, costly add-ons and hidden fees.
Debt consolidation loan is not a magic wand which can settle all your debt, in a moment. They help you by paying just one loan rather than multiple loans. But sometimes, people fail to recognize its limitations and fall into more trouble.
Keep in mind two things while taking a debt consolidation loan: • It will not fix your habit which lead you into debt, in the first place: overspending. • Look out for any hidden fees, as they are designed to profit the lender and they result in more expensive loans.
Do you know these facts: • Interest on Personal loans, for people with good credit score is around 14% to 15%. However, interest on the same loan can be as high as 18% to 21%, for the people with bad credit score. • Due to bad financial habits, many people fall into debt once again, even after taking a debt consolidation loan. If they do not discipline their spending habits, they may come closer to bankruptcy. • The insurance cost is added up front, and you end up paying interest each month on this extra amount. • If taken appropriately and after right financial consultation, then debt consolidation loan can possibly lower the interest rate on your loans.