Free Debt Management & Bankruptcy Articles

Professional Authors - Professional Articles



Debt Management Traps – What to be aware of with Debt Consolidation


There are a lot of debt management services available today and one of the main services offered by them is debt consolidation. Debt consolidation is a debt management strategy which works by replacing all of your existing debts with a single loan from a lending company. What are some of the pros and cons of the debt consolidation strategy?

Debt consolidation usually offers a secured loan to replace the unsecured loans which has the effect, generally, of lowering the interest rate as any default is covered by the secured property and therefore a generally lower risk exercise for the lender. A secured loan is secured against something the borrowers have equity in - usually a house - it depends on how big the debt is.

Debt consolidation can be an appealing and useful way to better manage your debts, however, there are things that you need to be aware of when choosing and applying for debt consolidation loans. As with all financial deals and arrangements there are advantages and disadvantages. There are some good companies out there who offer realistic deals, however a lot of companies propose deals that appear to offer instant debt relief and these companies should be scrutinized carefully. Easy money is generally concealing the biggest traps. There are a few things you need to be aware of.

Firstly, debt consolidation does not cut down the amount of your actual debts. It more often than not increases the amount you actually eventually end up paying. Why? Because debt consolidation allows you to pay a lot less than you should be paying in exchange for longer payment period. Yes, it seems great in terms of weekly or monthly payments but the end bill will be much larger in the long run. Let's look at an example. Let's say you have three loans. A car loan which you are paying off at $300 per month for 3 years. A personal loan which you are paying off at $150 per month for 2 years and a school loan which you are paying off at $50 per month for 3 years. A debt consolidation loan could be put in place that puts all three amounts into a single loan which you pay back at $400 per month for 4 years.

Individually the three loans would have cost you $10,800 + $3,600 + $1800 = $16,200. With the debt consolidation loan you would end up paying $19,200. You would have easier monthly payments but end up paying off a higher total.

The key piece of advice then is to look at two main figures to make sure the debt consolidation agreement is right for you. One is the amount of weekly or monthly repayments and the second is the total figure you end of paying. Don't be fooled by small repayments that can end up costing you a lot more in the long run.



Comments
Post has no comments.
Post a Comment




Captcha Image






BLOG TAG CLOUD
savings interest payments credit card help help with debt hospital debt management advice insurance professional debt more income management program good debt home equity management tips flat broke careful handling cash making payments stop harassment understanding home equity debt problems credit card debt budget ideas modified payment plan bank accounts good budget deb consolidation control spending monthly bill total balance overspending loan companies low interest new job great budget ideas debt payment period groceries live your life credit card companies doctors past bad debt secured loan understanding paying out debt managing debt invest money credit card savings account prioritizing software worksheet credit rating investing management advice child support mortgage payments whole family lose your job introductory offers common debt traps checking account paycheck rebuild good credit internet medical bill unexpected expenses learning experience debt traps overbearing bills take control of debt budget personal finances credit household items education good credit rating phone calls full details credit reports money help short sale need money check card house loan overcharging mortgages spending repay government assistance telephone bills credit scores account fees payday loan debt consolidation loans payment frequency lending company back support credit history monthly payment unemployed classify bills saving injury legal action security credit line visualization debt collectors installment plan building debts bankruptcy loan agents financial education become free school jobs tax info repay loans tracking money saving money trusted friends purchase protection consumer lawyer loan amount paycheck info debts court appearance seperate accounts discounts children budget loans budget sheet job loss live within means restrict spending account interest charitable organisation implement a budget interest rate ongoing bills gambling problem illness monthly budget debt solution financial security debt collection agency interest negotiation insurances candidate pay off bill Consolidation Company borrowing credit checks car loan debt management bank down payment common debt bills debit card bad financial decisions cable bill initial research losing your job original creditor home equity loans credit bureaus unsecured loan handling money finances specific budget categories Chapter 13 less money domestic support credit companies salary negotiate debt settlement losing a job purchases pay off debt comfortable living debt free family assistance gambling debts piling debts fly-by-night get out of debt home debts credit limit chapter 7 receipt credit score rent payments bad debt management child support debt monthly payments paying bills cancer debt relief credit cards unreasonable expectations creditors debt consolidation debt relief agency allowance great budget credit report debt consolidation medical debt buying a house family budget budget categories debt collector help ill health order report debt company medical bills payment behavior teaching children finance sickness debt programs second job utility payments interest rates credit card traps bad debt children saving reduce debts loss of income hobbies asset info social services deals in writing high interest rate expenses good credit record payday loan companies cash card loan debt management tips extra payments borrower installment plans repayment plans child spending filing bankruptcy extra money credit repair debt management mistakes checks assets credit company taking responsibility borrow money credit card company account charges spend money own money honesty part time job credit accounts save money personal finance younger children income liability regain control your rights emergency savings account loan harassment lending companies budgeting good credit



Copyright 2016 - Free Info Site Enterprises
Privacy Policy  |  Copyright Policy  |  Website Use Policy  |  Non Endorsement Policy  |  Contact Us  

Finance Blogs
best blogs