1) Make sure you are actually paying a low enough interest rate to make the consolidation loan worth while. Some lenders charge higher rates than credit card companies.
2) Without a decent credit rating you may be denied a consolidation loan, or may required to pay a higher interest rate.
3) Consolidation loads can be difficult to get because the banks usually want security, or collateral. If you do not own property or have assets, many lenders will deny the loan or they will require a co-signer. Be aware, that this means the co-signer will be responsible for the full loan if there is ever a default.
4) It can be difficult to consolidate some forms of debt such as secured loans, other bank debt and government debt.
5) Consolidation loans are not a quick fix. They can take years to pay off.
6) Consolidation loans can be dangerous because many people start using the same credit cards and other sources of financing they just paid off through the new consolidation loan, creating even more debt on top of the consolidation loan.
Remember….Do your homework. It’s okay to say no to the loan manager! If it doesn’t help you, don’t do it.
Before you agree to a debt consolidation loan, call us for a free consultation and we will provide an assessment of your financial circumstances to make sure there are not better options available to you.