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Things You Need To Know About Debt Consolidation

Fri, May. 12, 2017 Posted: 06:09 AM

Are facing problems with remembering the different loans that you have taken? are you finding it difficult to pay the interests individually? There is a simple solution to all these problems – debt consolidation. If you want to keep a good credit score and want to compare your debt consolidation loan for fair vs bad credit then you need to have a good idea about debt consolidation loans to begin with.

What is debt consolidation loan?

Imagine you have student loan to pay off, along with that you have now added a credit card loan to your account. These two different loans will have two different due dates and different interest schemes. It can get a tad bit difficult to pay off these loans individually as you have to keep a lot of things in mind. This is where debt consolidation can help you. When you go for this loan, all the different loans accumulated in your account will be consolidated and you will be charged a specific interest and one single date will be fixed for the payment of such loan.

Interest payable on such loans

The amounts of interest that you need to pay for these types of loans are comparatively higher than this debt consolidation loan. If you are paying a interest of 15% on one loan and 18% on the other, you can bring down the amount payable here to around 13 or 14%. This is a good scheme for people who are having difficulty in paying off high rates. If you think that you might default in the coming future, you can go ahead and use this scheme.

Time frame and payoff dates for debt consolidation loans

Since the interest payable on these loans is smaller in comparison to other loans, the payoff dates are much longer. Since you have to pay off the whole money anyway, you will have to keep paying interest over a longer period of time.

Losing benefits and protection from other loans

This is mainly for people who have taken a student loan. If you are on a loan, you will know that you get to enjoy certain privileges that come with it. You need to start paying off the loan only after you are employed and get a few perks as well. But if you go for this scheme, you will not be able to enjoy any of these benefits any longer.

Is debt consolidation loan good for you?

This is a very important question that you need to ask yourself. We advice that if you are not having any problem handling your different loan accounts, stick to your present individual scenario. In case you feel that you will default soon on the existing loans, you can go ahead and take the debt consolidation loan.

This is a popular type of loan that many people go for these days. But at the end of the day you will have to pay off any money that you owe to the lenders.

David Fournier