An average household in the US has many loans like mortgage loan on the house, car loans, student loans and credit card loans. This debt has multiplied across America in the recent times.
Some of the debts are manageable with proper planning, and committed payments on time. But the loans can just as quickly get out of hand if payments are missed inadvertently or because of difficult circumstances like the pandemic times we witnessed recently.
Debt Consolidation as you may be aware is getting all the debts under a single umbrella so that it is easier to manage. It is used by people who want to consolidate their debts into one monthly payment. This can help them reduce the amount of interest they pay on their loans, which in turn helps them get out of debt faster.
To know more details about debt consolidation, click here.
Who benefits from Debt Consolidation?
To review, debt consolidation is a process of combining all of one’s debts into one new loan with a lower monthly payment.
So, is debt consolidation the right option for you? Read on to know more about it and decide for yourself.
There are many benefits to debt consolidation, but it is not for everyone. Debt consolidation is best for people with good credit, who are able to repay the loan and have a steady income.
Debt Consolidation advantages and disadvantages
Below are some pros and cons of debt consolidation to take into account before making a decision.
Debt consolidation pros:
– Lower monthly payments
– Lesser interest rates sometimes
– Eliminate the need to make multiple payments each month
– Easier to manage
– Fixed payments
Debt consolidation cons:
– Higher debt load
– Higher interest rates in some cases
– More difficult to get approved for loans
– There may be added fees
Check out all the pros and cons of debt consolidation here.
Conclusion: Should I get a Debt Consolidation Loan?
Debt consolidation can be beneficial for people who have a lot of debt and are not sure how to manage it or repay it. It can help them get back on their feet and make sure that they are able to live comfortably without the stress of worrying about their debt.
The few things to keep in mind to make sure that debt consolidation is right for you:
- ability to repay the loan
- good credit score
- ability to meet the fixed payment schedule
But again, if the consumer does not look back and think about how so much debt was accrued and continues to do the same things again, the loans will become insurmountable even with a debt consolidated loan. Because missing a payment when you are on a fixed payment schedule for the consolidated loan, will set you back even further than the separate loans and will reflect poorly on your credit score.
Many lenders who offer debt consolidation loans have their terms, fees and other fine print on their websites. Take time to review different lenders and pick the right one for you!