DANGER OF DEBT CONSOLIDATION LOANS
Personal loan interest rates are the lowest they have been in years,
enticing consumers to assume more debt in attempts at alleviating
existing credit issues. The intent is to save money and eliminate
debt by consolidating higher-interest balances into one, easier to
manage payment.
However, consumers need to proceed with caution when looking to
satisfy debt with what can mistakenly be perceived as a quick, easy
fix. More than 70 percent of Americans who take out a personal loan
for consolidating debt wind up with the same debt total within two
years.
Personal loans for consolidating debt thrive off the practice that
got you in trouble in the first place. By utilizing financing from
another creditor, you are adding recognizable fuel to the fire. In
this situation, it's your money that is being burnt.
In addition, if you have excessive debt that you are looking to
eliminate by taking on more debt, chances are you are not going to
be able to receive the advertised interest rates. Those low interest
rates typically are for individuals with excellent credit and low
debt.
On the other hand, if you are at the end of your rope and promise
yourself that you will be more financially controlled this time, the
advantages of a debt consolidation may outweigh the risks.
Unsecured Debt Consolidation Loans
Have high interest credit cards forced you into looking to a
solution for your debt? A debt consolidation loan will help. Choice
offers a variety of
low
rate debt consolidation loan programs for renters and
homeowners. Debt consolidation loans offer convenience. Instead of
having to pay 15 different bills every month, you utilize one large
loan to settle all of those accounts and then make one single
payment for your debt loan, once a month.
It is very important that you understand your loan before you
commit. Specifically, will you be saving money by making the one
payment as opposed to doling out checks to multiple creditors? Most
consolidation loans do not offer favorable rates, especially for
those with high debt and less than perfect credit. In addition, when
you have nothing to secure your loan with, you can expect even
higher rates.
Compute all of the interest and fees for your existing accounts to
calculate the total amount of payments you are making. Then compare
those numbers with the rates and fees of your consolidation loan to
ensure that the loan makes more sense and is a wise option.
Related Reading:
Being a Wise Borrower
Personal Loan Scams
Unsecured
Loan Tips
Managing Your Debt
Good Debt vs. Bad Debt
Dealing With Creditors
Dealing With Collection Agencies
Compute Payments
Cheap Personal
Loans
Loan
Shopping
Bad Credit Loan Information
Borrowing
Advice for First Time Borrowers
Getting
the Best Rates
Applying for
Loans Online
When Refinancing
a Loan Makes Sense
Bad
Credit Unsecured Personal Loans for Getting Rid of Bad
Credit
Loan Aspects to Avoid
Consequences of Defaulting On Your Loan
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