Loan Consolidation >> Back to glossary
When individuals become trapped in a sea of financial debt they begin looking for a financial lifeline. They often perceive loan consolidation as being that source of help that is going to allow them to breathe easy again. Yet a loan consolidation so many times just digs a deeper financial pit that ends up totally ruining many individuals.
A loan consolidation is where you would take all your debts and roll them into one and end up with one easy payment. Sounds good doesn't it? No more having to deal with numerous creditors and sweating over who is going to get paid this month, and who you will have to deal with when you don't. Then look at all that interest you won't have to pay anymore. When a loan consolidation is agreed upon by a lender they will take all of your debts and pay them out. You will then make one payment to this new creditor at the agreed upon terms.
Here is where the problem is with loan consolidation. Often they do not cover all of your debt. They may agree to cover a good portion of them but you are still left with one or two on the side. Then yes, your payments will be lower and so will the rate of interest. However, with lower payments it means you will be paying a lot longer so in the long run still paying a hefty sum of interest. In addition to this, you may very likely have had to put up some assets as a guarantee for the loan consolidation or even had a cosigner or guarantor.
The next potential problem with a loan consolidation is that once you are not so financially strapped you begin to relax with being thrifty and start running up credit card debt once again. Before you know it you are now in a worse situation than before you opted for the loan consolidation.
The real debt solution starts with filling out our no obligation form here at DebtCafe USA. This will open the door for you to connect with financial experts, who will be able to design a debt resolution program for you that will show you an end in sight to your bad debt situation. Individuals who loan money as their business are professionals. When you run into difficulty with professionals then you need professional allies to help you resolve these problems. That is what we are all about here at debtcafe.com. Finding you the right financial resources with the right financial debt solutions, that does not involve loaning you more money so you can get deeper in debt.
