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4/13/17 at 03:54 AM 0 Comments

Find Aspects to Consider While Going For Debt Consolidations

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Adam Smith once quoted that a man’s real happiness lies in good health, no debt, and a clear conscience. This quote will undoubtedly advise you not to get trapped in debts. But if you are already in gigantic debts, then let us find an immensely satisfying way out of it. Debt consolidation has been known as a solution to several loans. Every coin has two sides, so does debt consolidation. Popular myth in debt consolidation is that it saves interest and you get to pay only one smaller payment. But the truth being debt consolidation is perilous since people treat only the symptom.

Introduction

Debt consolidation is actually a swindle because it makes you think that you have done something about the problem, but actually the debt is still there and now has increased to a new level. You can’t use any shortcut way out of any debt. A very renowned financial author says that debt is not a problem but a symptom. Since debt is a symptom of overspending and less saving. If you ask any financial expert he won’t recommend Debt Consolidation Loans for any of his clients. Do you know why? As debt consolidation doesn’t in reality targets the root problem and fails to work.

Statistics related to Debt consolidation

Experts say that Debt consolidation pictures to be very appealing since there is a lower interest rate on the debt and a lower payment is scheduled by the firm. But almost in every case we find that, the only advantage is lower payment, but they don’t see the extension of period done to entrap the debtor. There is a trouble-free concept behind this deception and that is if you hang about in a debt for a longer period, you pay the lender far more which is what the debt consolidation business does.

Example of Debt Consolidation

For example, consider that a person has $30,000 in unsecured debt in which you have a two-year loan for $10,000 at 12% and another loan of a four-year old for $20,000 at 10%. If we consider the calculations, $10,000 loan needs a payment of $512 and $583 for the $20,000 loan. The total payment accounts to be of $1,100 per month. Now, if you take this situation to a debt consolidation firm, he will tell you that your payment can be reduced to say $640 only per month and interest rate will come to 9% by bargaining with the creditors. Now who will deny that this deal isn’t enormously supportive? People would be unwilling to pay the extra $460 per month.

But there lies a catch, since they don’t tell you that I will take you six years to repay the loan. When you read this in the terms and conditions is won’t bother you, unless you estimate it latter how much extra you will be paying to this debt consolidation firm. To be exact, you will be paying $46,080 now and you would have paid $40,392 only. You are now suffering a loss of $5688 which is unquestionably going to the firm. Thus, you can imagine how the company is deceiving innocent people.

Finding a technique to get out of these debts

The response to this question is rather simple, it isn’t the interest rate; the key is Total currency revolution. The only method is by changing your spendthrift attitude. People need to stick to a plan, get an extra payment part-time job etc., and start paying these debts slowly rather going to a debt consolidation firm.

CP Blogs do not necessarily reflect the views of The Christian Post. Opinions expressed are solely those of the author(s).