Most credit active consumers think the best way to settle debt is by taking out a consolidation loan. Consolidation loans do not settle debt, they merely group up your debt obligations into one new loan amount. The benefit is one monthly repayment with one interest amount as opposed to paying varying interest rates across multiple debt obligations. When you take out a consolidation loan, the amount borrowed is used to settle your old debt obligations, leaving only the consolidation loan for you to repay each month. In summary, a consolidation loan pays multiple old loans with another bigger new loan. You are essentially paying old debt with new debt.
27 November 2012
What is Debt Consolidation and are the many offered in the market, true debt consolidation loans?
Debt consolidation is used for many loans, but a true consolidation is one that is used fully to pay your previous debts, thereby reducing the overall interest and monthly payment. Unfortunately many debt consolidation loans I see have high interest and other charges which mean a consumer’s situation is not solved, plus the other debts are not fully settled.
For me debt review is the best debt consolidation loan in the market place, as you are starting a program to become debt free, interest in many cases is reduced, you have 1 monthly payment and are debt free in the shortest period of time possible. On top of that you learn to budget, meaning you will be wealthier over your lifetime.