For those deep in debt with a credit problem, debt consolidation loans may seem to be like a god-send to help them finally get rid of their debt problems once and for all. You may owe thousands, or even tens of thousands, to the credit card company and many other creditors but is taking out a loan the best solution yet?
Before you dive in and take on a debt consolidation loan, it is best that you check up on the interest rates they charge and do a long term calculation of whether it is worth your while. After all, these loans do not come with very low interest and believe it or not, it may even compound your debt problem.
It may seem so much easier and convenient to pay only one creditor instead of 10 different creditors who may be charging you different interest rates each month. By taking up a big loan to settle all these debts and then paying only one company with one interest rate, you may think it is the best solution yet and a way to save some interest.
However, do bear in mind that it may just give you an illusion of saving on interest but the interest charged could be higher than you think. Do remember that due to your current credit rating, it is not easy for you to acquire loans, much less the ones with low interest rates. And if you don’t have anything as collateral for the creditor, the interest rate will be even higher.
So, do some number crunching first before you sign up for any loan to consolidate all of your debts. The best way is to total up the payments you have to make each month now and the interest you had to pay. Then you check out the amount you may need to pay including the interest rate charged if you take up a loan to pay up all of those debts. If the end amount is higher than what you are paying now, it is not worth your while to sign up for the loan.
Still, this is not to say that there aren’t really good debt consolidation loans out there that could really save you some money. You will need to check out more banks and credit companies to be sure. Remember to bring along your calculator.
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ReplyDeleteWe offer the following types of loans
*Debt Consolidation Loans
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*E.T.C
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