Dangers of Debt Consolidation Loans

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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Types of Personal Financing Opportunities Offered:
Unsecured Personal Loans - Bad Credit Personal Loans
Consolidating Debt with Personal Loans