Is debt consolidation the best answer for me?

Question:

My husband and I were recently told by a lending company that if we put all of our debts on payment plans, and got a credit card to start out our credit, they would give a loan. Would it be easily to consolidate all of our debts, which don't include any credit card bills whatsoever, or simply call each place and put them on separate payment plans?

It can be, but you have to watch the high interest rates when doing something like that. The idea behind them is to clean up your credit, which takes about 3 months after they do what they do, but if you are late on their payment or misunderstand the interest you are going to pay, you can find yourself back in the same boat.

Normally, all debt except for credit cards, is already on a payment plan. The one exception being a home equity line of credit, where you might just be paying interest for the first 5 years. But, you write that you have no credit card debt.

I would use a different lender. Any lender that advises you open a credit card and consolidate the rest of it doesn't sound like they have your best interests at heart.

The only reason you might consider consolidating the debt is if you can get a lower interest rate doing so. This would impact your ratio's for getting a loan. Otherwise, manage your own debt or see a financial adviser with nothing to gain by the choices you make.

That has got to be the lamest advice I've ever heard in my life. Why would a lender encourage you to get additional unsecured credit in order to obtain a loan, it makes no sense as they want less debt to increase their chances of getting repaid. Go to a place that specializes in debt consolidation and debt reduction and talk with them.

be careful yes you might pay less now but more in the long run,I'd try and clear your debts for the short term or you might end up getting long term loan and be in debt longer,remember why you got in debt and if it will happen again because next time it will be two debts

The problem with consolidation loans is to find a lender that will give you one at a fixed rate. Otherwise you at their mercy for a variable rate. It could start out at a great rate, say 8%, but if you're late, or just because they feel like it, they can jack up the interest rate on you and then you left paying alot more money. If you can find a fixed rate, great go for it. But if it's variable I wouldn't recommend unless you can pay it off in less than a year.

If I were you, I would just call each place and make payment arrangements. Pay more the minimums on them if you can. The quicker you pay them off, better it will look for you.

Good luck

Is debt consolidation the best answer for me?

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