Consolidate Debt – A Way to Break Free from Debt

2007-03-08 10:33:40

( Financial )



There are millions of people taking out loans every single day and about that same number is also wondering how they can consolidate debt and pay it all off. With a debt consolidation loan you obtain one loan to pay off your other existing loans. This is designed to help you if you’re strained in making multiple monthly payments.

You can use debt consolidation loans to:
•consolidate credit card debt
•consolidate home loans
•consolidate car loans
•consolidate student loans
•consolidate college loans
•or other existing loans

Many traditional banks and financial centers offer debt consolidation loans. There are some lenders that even specialize in it. Lenders may have different specific requirements you have to discuss with them. In most cases, a good steady income and suitable collateral are required.

Debt consolidation loans offer these advantages:
•Easier management of finances. When you consolidate debt, you have only one single monthly payment and one single creditor to deal with, which make things a lot simpler.

•These loans are often secured loans which require you to provide collateral to the lender which in turn allows you to have lower interest rates.

•With reduced interest rates and a single monthly payment, you pay less the amount per month compared to when you had several loan payments to make.

However, before you rush out to consolidate debt, take a look also at the other side of the coin.

•Most debt consolidation loans offer lengthy payment terms in 10 to 30 year periods. This means, it will take longer for you to become debt-free. Consequently, with long payment terms you may wind up paying more in total even with less interest rate.

•Again, because debt consolidation loans are mostly secured loans, you run the risk of losing your home or any property you offered as collateral when you fail to make payments.

•You may be tempted to go back to your old spending habits when your debt burden starts to ease. Hopefully, you’ve learned enough from your previous financial difficulties so as not to incur new debts.

Before making a decision, do some research first to find out what plan or loan is right for you. Study the loan terms carefully and understand the risks involved. Should you decide to go head with it, remember that debt consolidation loans will work only when you change your spending habits and become more responsible with your finances.


All rights Reserved © Tradenet Services srl
Do not duplicate or redistribute in any form.