Consolidating
your debts can be a good choice, if you are consistently missing out on the
payments for your loans. Enrolling into a debt consolidation program or doing
it yourself, will help you get rid of that constant pestering by your
creditors.
Before
opting for debt consolidation, as a solution to all your debt problems, have a
look at the pros and cons of debt consolidation programs.
4 Debt consolidation pros you may be aware of
Debt
consolidation offers several advantages when you are considering to get rid of
your debt burdens. Some of them are mentioned below:
1. Single monthly payment – The single monthly payment is the utmost
benefit that you can consider when you opt for a debt consolidation. A
consolidation combines all your dues together to make your debts more
manageable. You don’t have to worry about the multiple payments, as you only
need to make a consolidated payment every month.
2. Less harassment – When you consolidate your debts, you don’t
have to deal with all your creditors directly. You just continue with the
monthly payment on your consolidated debt, and the consolidation company will
deal with your creditors. You can thus avoid harassment calls or constant
reminders from the creditors and the collection agencies.
3. Lowers your interest rate – A debt consolidation company will negotiate
with your creditors to reduce your interest rates, and other additional
charges, when you enroll into a consolidation program.
4. Reduce your monthly payments – When a repayment plan is prepared, you can
opt for reduced payments on your consolidated debt amount. Thus you can pay off
your debts comfortably.
3 Debt consolidation cons you may know
Now,
you can also check out the below mentioned disadvantages for debt
consolidation:
1. Longer term period – The time required to pay off your debts may
increase, since your creditor allows lower monthly payments.
2. May fall prey to scams – All the debt consolidation companies in the
market may not work for your benefit, and may cheat you by taking advantage of
your desperate situation. So, you’ll
need to be cautious when you decide to work with a debt consolidation company.
3. Doesn’t work for secured debts – A debt consolidation program usually works
only for unsecured debts such as credit card bills, medical bills, utility
bills, etc. It generally doesn’t help you pay off your secured debts.
Well, the positive and the negative sides of debt
consolidation programs have been analyzed for your advantage. Now, the final
decision rests upon you.