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Debt Consolidation: Pros vs Cons

Many people have mixed feelings about debt consolidation and what it can do for them. Like many other things in life, this can be the ‘best’ step for every person who’s in debt.  It is different for each person and for each individual’s debt situation.

It’s best to weigh up all of your options before you go straight into considering debt consolidation. While there may be advantages to doing this method, it’s best to get all of the facts first before you give the green light.

To find out if debt consolidation is really the best step for you, the pros and the cons must be weighed up, and it is probably worth visiting a finance consultant as well. Some of the main pros and cons that could be considered are listed below.

Pros:

  • Lower interest or fixed rate
    This means you’re paying less on debt every month. Shop around for the lowest interest rates when you’re thinking about which company to consider. This way, you can plan accordingly with the options you have and end up coming out on top.
  • One creditor, one monthly payment
    Instead of several payments, you’ve concentrated all of your debts into one big payment, which may make it easier to manage. Pooling your repayments altogether can cause less of a headache later, with less stress down the line as well.
  • Reduction of the overall amount paid each month
    Less to pay means the more you can save for yourself, or for future consolidation repayments, depending on your situation.

Cons:

    • One creditor, one monthly payment
      Although it may be easier to manage, it takes away your ability to negotiate with your different creditors if further financial troubles arise.
    • Difficulties in gaining loans
      Or discharging your debts into bankruptcy. With something like this kind of loan found in your history it can be easy to be turned down by companies.

 

  • Longer term to pay
    Meaning you’re in debt for much longer than originally anticipated.

 

  • Pay more overall due to the increase of payment time
  • More debt in the long run
    If the person going to consolidate debts has a bad spending habit, it could lead them into more debt as they free up their credit cards.

In addition to the pros and cons listed above, it is vital to do the maths and don’t get pushed or rushed into anything. You have to be sure of what you’re doing and that it is the best option for you. There are dodgy companies out there who do not have your best interests at heart and this is when your research will come in handy. You should definitely be better off after the process; if that’s not the case, then it’s time to reconsider if it’s the best option for you.

If you’re struggling to get by with your loan situation at any time, contact Debt Mediators today for a no obligation consultation to discuss your options in a professional setting.

 

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