Debt Consolidation Can Help Your Financial Situation, But Only If You Do Your Research

If you struggle with debt, as most of us do, you probably get lots of notices in the mail from banks offering you personal loans with which to consolidate your debt.  On fact, they may even make it sound like consolidating your debt is a universal solution to everyone’s debt problems.  If that were the case, then why haven’t more people already consolidated their debt?  Consolidating your debt is not as simple as the purveyors of personal loans would have you believe, and in some cases, it leaves you with a monthly payment that is not much better than the status quo.  With a little research and planning, though, you can choose a debt consolidation loan that is right for your situation.  A Plantation debt consolidation lawyer can help you find the most affordable loan that will make the biggest dent in your debt.

What Does It Mean to Consolidate Your Debt?

Consolidating debt is when you take out a personal loan and use it to pay off several other debts, such as credit cards and medical bills.  Taking out a personal loan to consolidate your debt can be an attractive solution because it can save you money on interest and simplify your budget.  For many borrowers, the main incentive to consolidate their debt is the desire to get rid of the medical debt that has been following them around for years once and for all.  Making payments on a personal loan every month is a lot less stressful than keeping track of monthly payments on multiple debts, while they all continue to accrue interest, and while they will charge you late fees if you miss a payment.

The Hidden Costs of Personal Loans

Getting a personal loan to consolidate your debt isn’t as easy or as foolproof as it sounds.  First, there is the issue of qualifying for a personal loan.  Before you apply for debt consolidation loans, you should carefully inspect your most recent credit report and dispute any incorrect items, so that you can qualify for the least expensive debt consolidation loan possible.  As with any other loan, the better your credit score, the lower the interest rates on your loan will be.

Unless you are already on fairly strong financial footing, the only debt consolidation loans you apply for may include origination fees and early repayment fees.  In other words, even in the best of circumstances, a personal loan is not a free cash advance for paying off debt.  Even a debt consolidation loan that improves your credit score in the long run may require you to take a financial hit in the short term.  In the worst cases, you may not be able to get a debt consolidation loan unless someone with stronger credit cosigns with you.

Find Out Whether Debt Consolidation Is Right for You

Taking out a debt consolidation personal loan may or may not be the solution to your debt problems.  Contact Nowack & Olson, PLLC in Plantation, Florida to discuss your case.

Resource:

fool.com/the-ascent/personal-loans/articles/step-by-step-guide-to-getting-a-debt-consolidation-loan/