Does debt consolidation help people who need help with there bills?
Question:
Answer:
Consolidating means creating a whole new loan for a longer period of time. This would hopefully lower your payments enough so you can get back on track, in this case it might SAVE your credit score.
A credit counselor will give you some tools and suggestions for reducing your payments, just keep an eye on what the % are, you want it to be lower than what you pay now.
However, debt consolidation can be nothing more than a way of putting off the evitable. It really does little to correct the problem. That's why many people come back to debt negotiation as a way of getting out of their financial problems and starting fresh start.
this is where you can find trustful loan consolidation companies, it helped me thus far
http://debt-consolidation.50webs.org...
You will save a lot of interest, however, for most finance companies to consider you a candidate for loan consolidation, you have to have a mortgage. And some prefer that you have a certain amount of equity as well. But i'd definately say it's worth investigating. I'd rather be paying 7% off my credit card debt that 15% lol best of luck
yes...instead of paying a bill in full you effectively finance the bills over the period of your loan. If you own a house or condo you can get a home equity loan or credit line and pay off your bills with that...or you can try peer 2 peer lending (www.prosper.com)...the interest rate will depend on your credit rating, state caps on interest and how well you present your case.
In theory, yes. In practice, often it doesn't.
What usually happens is that all your debts (credit cards, mortgage, car loan etc) are lumped together into one loan. So you only have to pay one payment month to cover them all, and that payment is usually a lot lower than what you were paying.
BUT, and this is the big but - the reason you are paying less each month is not because of magic. It's mainly because the new loan is over a much longer term than the original debts.
So for instance, your car loan was for 3 years, your credit card you could pay off tomorrow if you could afford it, and your mortgage is for 20 years. The new combined loan might be for 25 years.
What that means is that, although the interest rate is probably much lower than your original loans, you're going to have to pay that interest EVERY YEAR FOR 25 YEARS. Even if you're not good at math, I'm sure you can work out that it's much more expensive to pay 10% interest for 25 years than it is to pay 20% interest for only 5 years. Over that time, you'll end up paying for your car or your credit card purchases several times over in interest.
On top of that, you're going to have the debt hanging over your head for 25 years, even though the car or the clothes you bought with the original debt are long gone!
Of course, if you've got yourself really badly in debt, there may be no option but to find a way to reduce your repayments, and debt consolidation is it. But if you have to do it, make sure your new loan allows you to make extra payments, and put extra money into it whenever you can afford it. That way you will pay it off early.
Unfortunately, a lot of people who do debt consolidation don't do that. As soon as their repayments are reduced, they feel like the problem is solved, so they go out and spend more on their credit cards and get themselves back into debt again.
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