Is this you or someone you know? Are you up to your eyeballs in debt and feel like your swimming in a pool of piranhas and do you have a wallet or purse full of credit cards all maxed out ? On top of that you have a home loan mortgage payment to make every month, leasing on the car and for good measure you have probably got a couple of personal loans for furniture you brought three years ago which is already showing signs of wear and tear. I wouldn’t mind betting that currently you are also struggling to make even the minimum payments and the foreseeable future is looking pretty bleak and the likelihood of ever getting out of debt seems at best 10 years down the road if ever. Many people have chosen debt consolidation loans as the option to put their house in order and pay of the various debts by one larger loan often secured on value of equity in your property. But in spite of the potential relief this act may bring you short term as the ads of contented customers would have us believe this may not always be the best solution or at very least may only be part of the solution and a range of other measures will need to be considered in conjunction with any proposed solution. Looking at the positives of debt consolidation you will be only making a single payment as opposed to payments to as many as 15 creditors , not only can this be a depressing thought it can totally devastate your cash flow month on month causing domestic and family unrest. Additionally in all likelihood since your loan will be secured on property you should be able to negotiate a better rate of interest than on unsecured borrowings such as credit cards. You will benefit generally as a result of lower interest rates with lower monthly out goings although a compromise between the reduced cost and increased term must be reached and it recommended you aim to pay at least the maximum you can afford each month and can pay with out penalty On top of this one significant advantage is that you will only be dealing with the one source of borrowing so that means only one customer service department , one phone call to make etc.
Sounds great, but before you pick up the phone and sign away your life just lets look at the potential downside as well. You could potentially fall into greater debt if the spending habits continue as they did prior to the debt consolidation in all likely hood unless your mind set changes your debt problems are likely to grow not shrink as next time having used your equity you will have exhausted that option already. In addition to this you will extended the debt and with most people’s pension provisions woefully inadequate anyway this could just be moving the problem to a later date. You should not forget also that over the longer term the actual amount paid may exceed the orginal amount that would have been paid with the shorter term loan. But the most significant thing of all is money borrowed unsecured and not repaid on schedule may leave you with a badly damaged credit rating but a loan secured on your home could if not paid will leave you and your family homeless as the lender will have the right to call in their security that being your home. So before making any decision seek out expert advice but don’t forget that your advisers will as a rule only get paid when you borrow money and are working for the lender and may not only have you interests at heart. Hans Geldermon is the owner of http://www.flfloans.com which is the premier resource for loans information. For more information go to: http://www.flfloans.com