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  • Hub You - Debt Consolidation - The Advantages and Disadvantages - What Your Bank Won't Tell You

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    It seems that everyone wants you to get a debt consolidation loan. The bank wants you to borrow from them, so they can charge you interest and make money. Mortgage brokers want you to consolidate your debts with a mortgage. Finance companies also want your business.

    The sales pitch for a debt consolidation loan is quite convincing. You have many debts, probably high interest rate credit cards, and you are paying more in interest each month than you can afford. You have payments due at many different times of the month, so it's hard to remember all of your payments. With a debt consolidation loan, you make one monthly payment, so budgeting is easier, and the interest rate is probably lower than what you are paying on your credit cards. Sounds great, right?

    Debt consolidation may be a great plan for you, but don't just look at the advantages. There are a number of disadvantages that your bank may not be so quick to share with you.

    First, one monthly payment sounds great, but it will be one big monthly payment. If you get paid every week, will your budgeting be easier or harder if you have one monthly payment.

    Second, there is

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    The sales pitch for a debt consolidation loan is quite convincing. You have many debts, probably high interest rate credit cards, and you are paying more in interest each month than you can afford. You have payments due at many different times of the month, so it's hard to remember all of your payments. With a debt consolidation loan, you make one monthly payment, so budgeting is easier, and the interest rate is probably lower than what you are paying on your credit cards. Sounds great, right?

    Debt consolidation may be a great plan for you, but don't just look at the advantages. There are a number of disadvantages that your bank may not be so quick to share with you.

    First, one monthly payment sounds great, but it will be one big monthly payment. If you get paid every week, will your budgeting be easier or harder if you have one monthly payment.

    Second, there is

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    ou can afford. You have payments due at many different times of the month, so it's hard to remember all of your payments. With a debt consolidation loan, you make one monthly payment, so budgeting is easier, and the interest rate is probably lower than what you are paying on your credit cards. Sounds great, right?

    Debt consolidation may be a great plan for you, but don't just look at the advantages. There are a number of disadvantages that your bank may not be so quick to share with you.

    First, one monthly payment sounds great, but it will be one big monthly payment. If you get paid every week, will your budgeting be easier or harder if you have one monthly payment.

    Second, there is

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    bably lower than what you are paying on your credit cards. Sounds great, right?

    Debt consolidation may be a great plan for you, but don't just look at the advantages. There are a number of disadvantages that your bank may not be so quick to share with you.

    First, one monthly payment sounds great, but it will be one big monthly payment. If you get paid every week, will your budgeting be easier or harder if you have one monthly payment.

    Second, there is

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    First, one monthly payment sounds great, but it will be one big monthly payment. If you get paid every week, will your budgeting be easier or harder if you have one monthly payment.

    Second, there is no guarantee that your interest rate will be lower. Before you agree to a debt consolidation loan, read all of the fine print. Many finance companies are famous for charging a high interest rate, and then adding extra charges for insurance premiums and processing charges. Make sure you understand all of the costs.

    Third, you may be required to give outside security, such as a mortgage on your house. That means if you can't make the payments on your debt consolidation loan, the bank can take your house. Your credit cards may carry a higher interest rate, but at least you don't have to worry about losing your house for missing a payment or two.

    Finally, you may only qualify for a debt consolidation loan if you have a co-signor. Do you really want to make a friend or family member liable if you are unable to pay? Probably not.

    A debt consolidation loan has a number of advantages, but be aware of the disadvantages as w

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