Debt is an unpleasant problem for all involved. A way to make it easier that is growing in popularity is debt consolidation. Millions have used this method to smooth their way to being debt-free, and start their financial lives again on a more level field.
A Restored Credit Rating
Consolidation loans let a beleaguered debtor take a breath while paying off bills that may have become too much to otherwise handle. These bills are collected and paid for with the loan, meaning only one account for the borrower to pay. Under this plan, accounting for any debt is much simpler.
An Individual Plan
When the number of creditors is reduced to one, the installment payments will be lower. Not only are there no longer multiple finance fees to pay, but there is no accumulation from several interest payments to worry about. Often, people face the problem of paying into the interest and fees, rather than into lowering the actual debt. Debt consolidation solves this problem.
Credit card companies especially tend to charge interest in such a way that it increases greatly month by month. Debt consolidation loans are constructed the opposite way, so they can be paid off in the most efficient manner possible.
The Advantages of Debt Consolidation
The money from the consolidation loan is used to pay for a number of other debts at once, clearing them from the borrower's credit record. The same amount of money is due, but now only to one creditor rather than several. As soon as the old debts are paid by the loan, the borrower's credit record begins to recover. Debt consolidation loans have saved thousands, if not millions, from bankruptcy and other terrible financial situations.
Don't Forget:
No matter how many debts are covered by the consolidation loan, after the loan is taken there will be only one account. There will be no more fear of letting one bill slip through the cracks, and going unpaid - and no fear of creditors calling with threats of repossession.
There will be a lower interest rate charged under the debt consolidation loan, not to mention, no finance fees. The lack of cumulative fees and interest means even more money saved.
If there has to be a choice, pay credit card balances first with the consolidation loan. Credit cards are notorious for high interest rates. Combining the credit card bills under the debt consolidation loan will greatly decrease the amount of money owed in the long run.
There is no reduction of debt. The amount of money owed to various creditors before the consolidation loan will be owed afterward. Only the number of accounts to pay will be reduced.
Debt consolidation is a method of last resort before the final step of bankruptcy and an utterly ruined credit rating. The inability or unwillingness to pay back a consolidation loan can have severe consequences.
Those who don't know where to find a good consolidation plan can ask around local banks and financial institutions. Even if they don't provide debt consolidation loans, they will be able to point the way to those who do provide them.
Watch out for scams and con artists. The debt consolidation boom has created a lot of untrustworthy means to steal money from those who can least afford to lose it.
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