One of the more enticing ways of fixing your debt problems is to take out something called a Debt Consolidation Loan, but is this really the best solution?
Debt consolidation loans are offered to debtors who are struggling to pay off multiple different debts. The way they work is that, in effect, all of those debts are rolled into one, easier-to-manage lump sum. Debt consolidation loan companies will essentially lend you the money to pay off all of your creditors immediately, and arrange for you pay make just a single monthly payment that is substantially lower than what you were paying before.
Unfortunately, debt consolidation loans aren't as clear cut as they seem. While it does simplify things and reduce your outgoings each month, there are many dangers than debt consolidation loan companies won't tell you.
Problems with Debt Consolidation
There are two main issues with debt consolidation loans that make it an unwelcome solution in most circumstances:
* You can get into more debt
* You will end up paying more overall
One of the biggest problems is that debt consolidation loans often lead to people getting into even more debt. Once you take out a debt consolidation loan, this means that other lines of credit that were previously exhausted, such as your credit cards and store cards, are now available to use once again, as these have been paid off by the loan company. Many people find it incredibly difficult to resist the temptation to use these lines of credit (after all, that's how they got into such bad debt in the first place!), and so they quickly find that they are building up new debts once again.
When this happens, suddenly you can find yourself in an even worse situation than before - paying off your consolidated debts AND your new debts.
For those who lack the self-discipline to avoid spending money they don't have, debt consolidation loans are a very bad idea.
The other big problem with debt consolidation loans is that you'll end up paying substantially more than you had to before. The monthly payments on debt consolidation loans may be cheaper than before, but this is only because you'll be paying off that amount for a much longer period. Don't forget, the debt consolidation loan company's primary goal is to make money, and they do that by dragging out your debts for as long as they possibly can!
The debt consolidation loan is little more than just a confidence trick. It might make things sound easier, but the fact is you'll be paying a lot more in the long run. The only really way to get out of debt is to bite the bullet and speak to your creditors.
With our expert help, it's possible to renegotiate your debts to a level that you can afford. Speak to one of our credit counselors today, and find out just how much we can shave off your debt. We'll work on the best solution for you, which could range from just some simple budgeting advice, to asking your creditors to agree to a reduced debt. It's amazing what can be done to reduce debt - all you have to do is ask!
So don't delay, contact us right now and speak to one of our debt counselors for free - find out just how easy it is to get out of debt for good!