“Debt Consolidation” is one of the most commonly misunderstood and misinterpreted personal finance strategies that consumers inquire about all the time. While some view it as a method of taking on new loans, others see it as a debt relief alternative. It is more important than ever for inquisitive consumers to have a very strong understanding of exactly what debt consolidation entails, and the impacts it can have on personal finances.
There are many benefits to consumers from debt consolidation, including lower payments, lower interest rates, fewer accounts, and the peace of mind of dealing with only one creditor. However, with all the misinformation available on the web, learning about all the pros and cons of debt consolidation can be a time consuming and confusing process, when in fact it is relatively simple and straightforward.
We have compiled the vital information that consumers need in order to make a well informed decision regarding debt consolidation as a potential strategy to resolve credit troubles and improve their finances.
What is Debt Consolidation?
Debt consolidation is a process that allows qualified consumers to take out a new loan that pays off most or all of their outstanding debt. This new debt consolidation loan, by aggregating all of the individual debts and paying them off, often becomes the only debt consumer makes payments to. Debt Consolidation loans usually come with interest rates considerably lower than those loans that consumers are currently saddled with and are trying to pay off, usually consisting of car loans, personal loans, student loans, and high interest rate credit cards.
By taking out a debt consolidation loan, consumers can potentially save thousands of dollars over the life of the loan, since debt consolidation programs offer relatively low annual percentage rates on their loans making the savings substantial and immediate.
More Debt Consolidation Information
1. What are the pros and cons of debt consolidation?
2. How to find the best debt consolidation loans?
3. How to differentiate between debt consolidation programs?
4. Is consolidating credit the same as debt consolidation?
Once consumers have a solid understanding of debt consolidation they can compare and contrast it with other debt relief options like debt settlement, credit counseling, debt roll-up, or filing bankruptcy.
In addition to fully understanding debt consolidation, every consumer should thoroughly research all of these alternatives, so they can make an informed decision as to what solution is the right choice for their particular situation and financial goals.