The easier access to credit cards and loans, though having made life better, have put many debtors into a worse financial condition where they have to pay a large amount of money each month. Given the current economic climate, countless people are now overburdened by high-interest credit cards, overdrafts, mortgage loans and other monthly payment. Then how to relieve their hardship and enable them to recover the financial footing? Debt consolidation seems to be a good relief solution.
Simply speaking, debt consolidation means the practice of consolidating a multiple of bills, loans or any other payments, which are often the unsecured ones, into a single loan (more typically a secured one). By doing this, the debtors can bear comparatively lower interest rates, secure a fixed interest rate or avoid the endless calls from creditors that harass them. After eliminating the high interest fees on credit cards and other payments, the debtors can live a much more stress-free life.
It is a common thing that through debt consolidation, the debtors will enter into a secured loan that is against their personal assets, in most cases the houses. With the house serving as the mortgaged collateral, the risk undertaken by the lenders will be reduced, for if the debtors fail to repay the loans, the lenders are able to sell the asset to pay off the loan. In return, the reduced risk incurs the lower interest rate.
Today, when people have multiple debts, particularly those caused by credit cards, debt consolidation will be advisable in theory. As we know, credit cards often take high interest rates that are even larger than unsecured loans. By combining all personal debts into a mortgage loan using the property as collateral, the debtors can get a lower rate from a single loan, operated through a third party and paid amortization. That is to say, debtors’ money will be protected from being taken from bank accounts directly. And the annoying calls from the lenders that report your debt due will cease.
Since debt consolidation has saved time & interest and allowed smaller monthly payment, the debtors must save a large sum of money by consolidating, right? The answer is NO!
First, you should keep one thing in mind – your debt is still there. No one would expect to escape out of a hole by digging out the bottom. Though your monthly payment is smaller by debt consolidation, the total amount that you repay is usually strikingly higher due to the long term of the loan. Just think that with combination of all your debts, the term of the repayment will be much longer. In a long run, the debt consolidated will cost the debtors more interest.
Furthermore, as many people run into a secured loan against their home by debt consolidation, once they can not come up with the repayment, their home will be foreclosed to pay off the debts. Actually, those debt relief providers or consolidators, though they tell you that they keep your best interest in mind, only treat the symptoms of your debts but seldom inform you of the root problem. After all, they are working to make profits for their own business.
If you want to find out more about debt consolidation in the UK, there are a range of useful debt consolidation resources here.
Get Debt Consolidation Assistance
Debt consolidation is now considered a great way for people to get out of debts. If you’re considering taking a consolidation loan, it’s best to ask professionals for debt consolidation advice, since there might be some type of risk involved. Still have no idea where to begin with? There are a few common advices to get you started:
1. Debt consolidation counseling companies can be easily found both ONLINE and OFFLINE. They will provide you with plenty of solutions to address your debt problems and ease your financial burden.
2. Popular debt consolidation services include 1) monthly payment reduction, 2) credit score improvement & 3) negotiation for better interest rate.
3. If counselors are not preferable for you, try to get debt consolidation help from your creditors.
4. Talk to a loan advisor to see if there are any chances for you to combine all your loans into a single one.
5. Negotiate with one of your lenders to take a low interest consolidation loan.
A Guide to Your Debt Consolidation
If you are in the debt trap and find it hard to pay your monthly debt on-time, find out your problems and let professionals take over your debt burden. Some organizations are advertising a list of benefits. On the contrary, some of them might require you hidden fees. Thus finding for a competitive debt consolidation expert requires some skills. Here are useful tips for your consideration.
• To find a best solution to get through your debt problems, a research on these reputable debt management organizations is necessary. For example, some debt management organizations or programs are non-profit, such as Trinity Debt Consolidation which focuses on debt counseling and consolidation with no limitation set on debtors, and Greenpath Debt Consolidation which possesses up to 50 full-time branches stretched out to several cities.
• Among these non-profit organizations, there are still other special debt management organizations, such as Christian Debt Consolidation which is specially designed for Christians with guidance of Christian principles and philosophies.
• Besides, you can also find help from low-cost debt management programs, for example, American Debt Consolidation which is tailed for you with its thoughtful debt programs and dedicated professionals.