Debt Consolidation Loans

For those in debt, debt consolidation could help get your financials back on track. Even still, many consumers don’t realize that debt consolidation loans aren’t the only way to consolidate your debt. In fact, debt consolidation loans can actually sink you farther into debt.

Debt consolidation loans combine your unsecured debt into a single loan that requires only a single payment. These loans are established between a debtor and a debt consolidation company, not the creditors you are in debt to or your credit counseling agency. The debt consolidator will work with your creditors to pay off the debt and, in turn, you’ll make a lower, fixed monthly payment towards the debt consolidation loan. In this situation you will be making the payments to the debt consolidator as your debt is now with them.

Though some people may find relief with this option many of those in debt will not. In actuality, many people who are in debt can’t get qualified for these types of loans because their credit. Often debt consolidation companies will require the debtor to put up some sort of collateral, like a home, in order to secure a debt consolidation loan. This in and of itself is another danger to the debtor. If you have used collateral to secure the debt consolidation loan then have trouble making the payments on the loan, your collateral could be seized by the debt consolidator. That could significantly hurt your financial well being leaving you worse off than you started.

There is also the issue of interest on a debt consolidation loan. Typically the interest on a debt consolidation loan is approximately 17-23%. That’s a hefty amount of interest that may actually be more than you are currently paying on your debt. This means it would be hurting, not helping, you in reducing your overall debt. Often times there are also fees associated with debt consolidation loans that will increase their total cost as well.

That’s why client-focused credit counseling agencies like CareOne providers chose instead to enroll their clients in debt management plans and not debt consolidation loans. These individualized plans created by knowledgeable credit counselors help debtors consolidate their debt for easier payment while keeping interest rates low enough to make it a sound debt reduction option. Debt management plans offered by the Providers of CareOne Credit Counseling Services can lower your monthly payments up to 57%.

Don’t let yourself fall further into debt by choosing the wrong debt management solution. Start planning your debt free future today in just a few moments by providing us with some basic information. We’ll send you an estimate on how much you can save as well as our valuable Surviving Debt Guide both free of cost with zero commitment.