If you have a lot of credit cards and owe money on them all, it can be a real pain in the neck keeping up with all your bills. And wouldn't it be nice if there was a way to pay less than the total of what you're paying every month?
Many people in similar situations decide to get debt consolidation loans. It could work for you but there are a couple of things you should consider before you decide to apply for one.
You will end up owing more than you do now.
Debt consolidation companies charge a fee for their services. And, although you will pay less every month, you will pay for a much longer amount of time and will end up paying more than you would have before you got the debt consolidation loan. If your credit is less than perfect or if you've been late on your payments you will be charged higher interest rates.
If you really need a debt consolidation loan there's a very good chance you will be charged very high interest rates. Make sure to compare them to the average of what you are paying now before going ahead.
Debt consolidation loans can hurt your credit score.
When you apply for any new credit your credit score drops. In addition to that you will close existing lines of credit and that too will lower your credit score.
If creditors agree to accept less than you owe it can actually ding your credit.
Negotiating and getting a "deficiency balance" counts against your credit score. And the results are risky. Did you know that in a lot of states it's legal for creditors to renew on that agreement?
And finally, you're still in the same old boat.
Poor spending habits got you into trouble and if you don't deal with that your boat will probably sink. A lot of consumer agencies have found that people who have taken out debt consolidation loans end up even deeper in debt than before they got the loan.
And for more about the pros and the cons of debt consolidation loans and other free information about debt relief, go to http://www.FindReliefFromDebt.com
No comments:
Post a Comment