When you’ve managed to bury yourself in debt, it’s difficult to see how you will ever get out of this situation. Especially as a person who has a lot of debt in a lot of different places, it’s tricky to juggle the responsibilities of paying them all, and on time. What you need is a plan, and that can be a debt consolidation loan.
What is Debt Consolidation
A debt consolidation loan is a loan you can take out, combining those you already have. Suppose you have to pay off a personal loan and two credit cards. Instead of dealing separately with each of these places and paying them at their rates, you consolidate your total sum and pay off a single loan. As with anything else, there are pros and cons to consider, so here are some arguments from both sides.
The Cons of debt consolidation
Debt consolidation loans don’t seem like such a great idea at first; after all, you are taking out yet another loan. For someone who is in a precarious financial situation, that is not ideal, and it may give you anxiety. Taking this loan requires you to give it a lot of thought.
The Pros of debt consolidation
Regardless of how counter-productive it may seem, debt consolidation is actually a very good idea for someone who finds themselves drowning in the quicksands of debt. Taking out a debt consolidation loan means that you are actually saving time, money and effort.
First of all, you eliminate the need to pay in several different places, discuss refinancing options, pay visits to each and every location, etc. With only one place where you need to pay, you considerably cut back on time wasted.
Secondly, there’s the problem of money. “Isn’t it still the same total final amount?” you may ask yourself. Yes, it is, but where you are going to save money is in interest. You see, you no longer have to pay all the different interest rates, but a fixed one that is lower.
Of course, then there’s the matter of convenience. It is much easier to pay in a single place then to keep track of all of your debt, how much you have left to pay, how much of that is interest, how much you have per month in total, etc. Debt consolidation eliminates that time and effort spent keeping track of your debt by bringing it all together, in one place.
At first sight, taking out a debt consolidation loan may sound like the worst thing to do if you already have too many debts under your belt but this may be a necessary evil that will eventually save you.