At the point where your debts have reached a high and your lender are giving you ultimatums, nothing will work miracles better than knowing that someone is still willing to go that extra mile for you. It is at this junction where banks including your branch denounce you and the credit bureaus highly alienate your worth so much so that between your remaining savings and any retirement benefits you may still own, you are a hopeless case. However, thanks to the rapid evolving of debt consolidation programs, there still remains hope for you and your debts.
What are debt consolidation programs?
This is when you obtain a big loan that help in paying off other smaller loans. While these can be quite beneficial to help deal with stubborn debts, they are not without their pitfalls. If you are paying off a variety of debts, your life may seem much easier if you combine all of them into one, again if you feel that your repayment interest will decrease if you combine your loan into one, then you would be able to free up some cash towards your overall repayments.
What are the possible pitfalls?
The most important thing you need to take into consideration is that a debt consolidation loan will not in any way eliminate your debts. You still owe money and you will have to pay it off at one point or another. While this in one way, it is not the only way but it might end up becoming your best decision ever though it is neither without its possible pitfalls including:
Careless spending– You can imagine the immense relief you would feel if all of a sudden your credit cards register generous amounts of cash where there was nothing. The temptation to use this money might dig you in debt pits you can no longer surface from.
More interest – If you are paying on compounded rates, stretching your repayments for a longer period might see you paying much more interest than you had initially dreaded.
Asset gambling– You are bound to use your home as collateral for a consolidated loan. While even the best laid plans sometimes still go off track, you might end up losing your hard earned home in cases where you can no longer keep up with the payments. Can you imagine if you end up losing everything trying to save the day?
Various Debt Consolidation Programs
There are a variety of choices to consider and hence the grave importance here is to shop around for the one that best suits your needs. Here are some options to consider:
- Peer to peer lending sites are quite a plus.
- You can try banks that you have no ties with you currently which are likely to give you a great deal so as to acquire new business.
- Mailers who send you invitation to try their consolidated loan programs because the reason they mailed is probably because they are willing to give you a fair deal. However, with so many scams, you will need to be extra careful not to fall victim of a con.
- Internet surfing might also do the trick, although again a lot of caution is required when deciding on a debt consolidation program.