Debt Consolidation Can Save You

Debt Consolidation Can Save You

by Heather Ale

There are a lot of myths going around about the consolidation loans and whether they are a good thing are not. Many consumers believe that the consolidation loans are just hype from debt management companies trying to make a little money. This is not true. While the debt management companies are there to make money they are not going to sell a product that isn't for your benefit.
Now are there ways that a consolidation loan can hinder your progress on getting out of debt? Yes. So as the consumer of consolidation loans you need to understand what they are about and how they can help you.

First of all with consolidation loans you are trying to save money not only in the moment, but also in the future on the debts you have. It is important to learn how to do this so we are providing an example. Say you have 30,000 pounds on debt. A car loan at 12.95%, a mortgage at 7%, one credit card at 14.99%, a student loan at 6.5%, and a second student loan at 2.5%.

The credit card is the easiest thing to pay off in a short amount of time in most cases, but you have to have the money to do so. Most individuals get stuck with consolidation loans that actually cost them money because they haven't thought about what debts to lump in the loan.

Look at the example you know that in ten years you must pay off the student loans, so why if you get a consolidation loan for 7% would you lump those two loans together? The answer is your wouldn't. It pays to be smart about what you allow in the consolidation loan.