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Debt Consolidation
By moving high interest debt to a lender that offers lower interest rates, you could save on interest and simplify your monthly budgeting.
PROS
- One predictable monthly payment
- Flexible terms
- No credit impact
CONS
- Need good credit
- No reduction on principal
- Results vary
If you are making payments to multiple creditors every month and getting overwhelmed, you may want to consider consolidating all your debts and paying them off with a debt consolidation loan or a personal loan. Use the loan to pay off all your creditors, and you only have to make a single monthly payment to the lender. Learn more about debt consolidation and how it works.
Making one payment for your debts may be more convenient, but you need to consider how much it will cost you overall. Debt consolidation and personal loans may require a lower monthly payment, but you could pay higher interest rates over the course of the loan. Only take out a loan if you are prepared to make the payments on time and in full.
Be aware that some loans require collateral, which means the loan is secured by an asset you own. When you agree to the terms of these loans, you are agreeing to forfeit the asset to the lender if you fail to repay the loan. So if your collateral is your home or your car (and it will need to be something of high value like that), then you could be in danger of losing them if you can’t pay your lender. It’s a trade-off: more risk for you, less risk for the lender, which means a better interest rate.
What if you don’t have collateral? After all, not everyone is a homeowner. Some lenders offer unsecured loans that don’t require collateral, but they typically have higher interest rates because the lender is taking on more risk. High interest over a long repayment schedule could add up to a lot of money — on top of the debt you already need to pay.
Keep in mind that with a loan you are not really paying off all your debt — you’re simply paying off old debt by taking on new debt. This could be a wise strategy, but only if you are able to qualify for a loan interest rate that is much lower than the interest rate(s) you are already paying on your debts.
Debt consolidation loans aren’t right for everyone. If you don’t have a large amount of debt (at least $10,000) then consolidating might not be a good solution.
Choosing the right debt solution can be stressful, but Global Client Support LLC is always here to help you weigh the options. Contact our Certified Debt Consultants today at (888) 258-9494 to see how debt consolidation compares to our debt resolution program so you can determine which is best for you.
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