“I Need a Debt Consolidation Loan.” … Do you?

“I need a debt consolidation loan.” This is probably what you’re thinking right now especially if you’re behind on your credit card bills and your phone’s been ringing off the hook because your bank has been calling you up 24/7. You’ve probably consulted a debt counselor and considered that the best answer to your debt problems is a consolidation loan. If you’re already convinced that this is what you should really do, then go ahead. But because you’re reading this, I’m thinking you’re still unsure and that you’re really counting the costs before plunging into a lifesaving net or the biggest rut you’ll ever find yourself in.

One thing that you probably already know by now is that consolidating your debt means that you make a single loan so you could pay off all your other debts. This can be a good thing if you find a fair rate; that is, a rate that’s not higher than the total amount of your debt. The thing about loans is that it’s not easy to find a fair rate. The likelihood is that you’ll find rates that will let you pay less each month, but with interest. Because you’ll be paying for a longer time, you’ll end up paying a bigger amount than the original. If this is the case, then maybe a debt consolidation loan is your best option.

If you’re after more secure loans, then this will involve your assets, like for example, your house. If you decide to loan from a bank, putting your house under mortgage and setting it up as collateral will most likely give you a loan with less interest rate. With your house under mortgage, the bank can afford to give you less interest rates because at the time that you are not able to pay back your loan, they’ll get your house and benefit from your loss.

If you’re still thinking “I need a debt consolidation loan” after everything that’s been written here, then go ahead. You may want to consult a debt counselor to advise you on solutions depending on your situation, or you can do more research. Debt consolidation is not easy; paying for your loan isn’t easier. If you’re still hoping to save money while you’re buried under the rubble of debt, I really think you should visit your debt counselor and talk things over a bit more so you can explore your options.