Comments on: what does a debt consolidation loan do for you?

By: Batlise

Batlise — Tue, 11 Nov 2008 13:54:01 +0000

Just know it is a very bad mark on your credit history - up to 7 years on your credit after you are done. It’s as bad as a vehicle reposession. You are also paying interest on the interest you have already paid the credit card companies. There are other options.

By: Mike Jones

Mike Jones — Sat, 08 Nov 2008 09:41:49 +0000

It is an alternative way to reduce your debt. The easiest and most cost effective ways should be to decrease the amount that you’re paying towards interest each month. A good start would be by paying as much as possible toward the debt that you have the highest interest rate on, but some peoples couldn’t afford this.

The alternative way is to consolidate all of your high interest debt into one lower, fixed rate loan. When you borrow money at a low rate to pay off debt at higher rates, you may be able to save a considerable amount of money. What’s more, you’ll also be able to pay off your debt faster since more of your money will be going towards the principal balance each month. So this is how debt consolidation loan works.

By: Marla

Marla — Wed, 05 Nov 2008 03:06:51 +0000

Debt consolidation usually buys your debt at a discount and you pay them the full amount plus interest. The main part to understand is they own the debts and could sue you for it easier than the original creditor. A couple of phone calls. the trip to Disney land becomes a major banking debt after you sign up all the papers. If you default, they don’t call you as a collection agency, they go straight to summons, liens etc. Their not credit repair. It will show that your paying the debt due to the type of account listed under them. It is still up to creditors if they want to lend you money or credit goods.

By: Dewey H

Dewey H — Tue, 04 Nov 2008 04:54:31 +0000

There are several advantages of Debt Consolidation Loan. First, you lower your interest rate on debt. Second, you only make one payment a month that pays on numerous debts. Third, you can lengthen the amount of time to pay on your consolidated loan, which lowers your monthly payments.

Typically debt consolidation loan is a type of unsecured personal loan. It shortly means, exchange of one loan for another. When you have several high interest debt you can consolidate it into one lower, fixed rate loan.

Debt Consolidation Loan is only one of the part of Debt Consolidation, there are many other plan to choose from.

Check out this link for more details :

By: jessicarae1189

jessicarae1189 — Sat, 01 Nov 2008 06:29:07 +0000

1. How Does a Debt Consolidation Loan Work?
When you consolidate your debt, you pay off the balances on your credit cards, and other loans with the money that you receive from the new loan. After you do this, you only have one payment to make instead of several. You can do this with a second mortgage or a home equity line. Some companies offer an unsecured debt consolidation loan. You need to be careful with these because the interest rate is usually very high.

2. Is it a Quick Fix or a Permanent Solution?
Most people who take a debt consolidation loan will run their credit card balance back up within two to three years. A debt consolidation loan does not address the real problem, which is spending more than you make. If you do not address this issue, then you end up worse off than before, because you will owe twice as much money.

3. Beware of Changing Unsecured Debt into Secured Debt
Generally a debt consolidation loan will take unsecured debt and change it into secured debt. If something were to happen to you and you were unable to make the payments on your home equity loan, and then you could lose your home. If you were unable to make payments on your credit cards, you credit score will go down, but you are not likely to lose your home.

4. Will a Debt Consolidation Loan Save You Money?
While the initial interest rate may be lower, because you are extending the length of the loan (with lower payments), you may end up paying more in interest than you would have otherwise. So you may not be saving the money that you thought you would by taking out this type of loan.

5. Alternatives to a Debt Consolidation Loan
You can take care of the situation by setting up your budget, and a debt payment plan. You can also work with your creditors to see if they can lower payments and interest rates for you. It is only through addressing the reasons that you have debt that you will be able to get out of debt and stay out of debt.

By: SDD

SDD — Sat, 01 Nov 2008 02:20:51 +0000

Essentially, you borrow money from a source and use it to pay off all the other debts you have. Presumably the interest rate on the consolidated loan is lower than the ones you are paying off.

By: EJ

EJ — Thu, 30 Oct 2008 02:07:27 +0000

I debt consolidation loan is a loan that you take out and use to pay off all of your other debts. For example, if you have a car loan for $5000 with a payment of $300/month and a few credit cards totaling $2000 and debt with payments of $200 a month, you would get a loan for $7000. Consolidation loan will often have lower interests rates than credit cards, so you monthly payment might only be $400 a month.
This means that you would only have one debt payment to make and hopefully would be paying less in interest every month and get it paid off sooner.
It can work well if you have the control not to run up the debt that you got the loan to pay off. If you don’t have the selfcontrol you will only be in a worse situation.