Finance, Loan, Debt and Credit.

March 13, 2018

Potential Disadvantages of an Adjustable Rate Mortgage

Filed under: Mortgage — Tags: , , , , , , , — admin @ 12:46 am

There are both advantages and disadvantages to adjustable rate mortgages. Your lender may be pushing an adjustable rate mortgage for any number of reasons, including that they are more profitable for the lending company. If you only look at the advantages of an adjustable rate mortgage, they can sound pretty good. You start with a lower interest rate, which means lower monthly payments. Because of the lower payments and rate, you may be able to afford a larger mortgage. Your lender may be pitching it as a way to buy a bigger house than you could otherwise afford, or suggest that it’s a good way to get into the housing market. Most commonly, the lender may suggest that you should take the adjustable rate mortgage for now, and refinance later when the rates adjust up. While all of these things are true, there are also cons to an adjustable rate mortgage. It’s important that you consider both sides of the issue before making a decision on the type of mortgage that you want to take out.What an adjustable rate mortgage is Unlike a fixed mortgage, which comes with a specific interest rate that remains the same for the life of the loan, an adjustable rate mortgage (ARM) has an interest rate that fluctuates according to a specified index. Your adjustable rate may be tied to the interest rate on Treasury Bonds, to the Consumer Price Index or to a number of other indicators. If that index rises, your interest rate – and your monthly payment – will rise. If it drops, so will your interest rate and monthly payment. Why adjustable rate mortgages can be attractive When lenders approve a fixed rate mortgage, they are placing a finite limit on the amount of money they’ll make from that mortgage. An adjustable rate mortgage offers the lender the possibility of making more money if interest rates rise over the life of the loan – which is a good possibility. To offset the limit on fixed rate mortgages and make adjustable rate mortgages more attractive to home buyers, lenders typically offer lower interest rates on adjustable rate mortgages than they do on fixed rate mortgages. In essence, they are offering borrowers a more attractive rate in return for assuming the risk that their mortgage rate and monthly payment will rise over the term of the loan.The down side of adjustable rate mortgages When looked at in that light, some of the cons of an adjustable rate mortgage become obvious.1. Interest rates can go up, raising monthly payments as well. Most borrowers understand and accept that their monthly mortgage payment may rise, but are willing to take the chance that their mortgage will continue to remain affordable. It’s important to know the caps on interest rate rises by which your lender is bound. When you shop around for the best adjustable mortgage, it’s important to look further than the initial interest rate so that you understand exactly what expenses you may be agreeing to.2. Over time, payments nearly always surpass the payments on a fixed rate loan for the same amount. If you’re planning to stay in your home for the long haul, this can be an important consideration. Depending on the specific loan agreement that you make, it may be several years before the interest rate and monthly payment reach and surpass the monthly payment for a fixed mortgage. If you’re only planning to stay in your new home for a few years, this can work to your advantage, because you’ll be paying lower monthly payments for most of that time. If, on the other hand, this is your dream home where you plan to live the rest of your life, a fixed rate mortgage is probably more economical.3. Fluctuating payments can make it difficult for you to make a budget. While many ARMs only adjust once a year, some may adjust as often as once a month. More frequent adjustments can make it very difficult to fit your monthly mortgage payment into your budget because you will only know what your next month’s payment will be when you receive your notice. Even in the longer term, a fluctuating mortgage payment can make it difficult for you to plan long-term savings and investments.4. If fixed rate mortgages become favorable enough that you decide to switch, you’ll have to refinance and incur the costs and fees related to refinancing your mortgage.5. The annual interest cap may not apply to the first interest adjustment, and it may be a big one. Many lenders offer very low initial interest rates on ARMs to attract first time home buyers. Often, these mortgages exempt the first increase from the annual cap on adjustments. This can be especially difficult if the ARM was one of the hybrids that offered a low fixed rate for one to five years, with a jump to market interest rates at the end of the specified period. When that happens, your monthly mortgage payment can suddenly rise by hundreds or even more than a thousand dollars.

Brain Jenkins is a freelance writer who writes about topics and financial products pertaining to the mortgage industry such an adjustable rate mortgage available from a mortgage company.

February 8, 2018

Advantages and Disadvantages of a Fixed-rate Mortgage

Filed under: Mortgage — Tags: , , , , , , , — admin @ 12:46 pm

It is a decision that is almost as important as which house you purchase – which type of mortgage to get. Choosing the right mortgage for your specific needs can potentially save you thousands of dollars over the term of the mortgage. Your two basic options when it comes to a mortgage will be a fixed rate (FRM) or an adjustable (ARM) mortgage, although you may also be able to qualify for other options such as an FHA loan or a VA loan.

Most home buyers take out a fixed rate mortgage – around 70% of all mortgages are fixed rate as opposed to adjustable. A fixed rate mortgage is exactly what it sounds like: the interest rate on your loan will not change, regardless of the economy or whether interest rates rise or fall. The terms and conditions of a fixed rate mortgage are also protected by law. An adjustable rate mortgage will go up or down depending on the interest rate at the time. Whether you should choose a fixed rate or adjustable mortgage depends on the general state of the economy along with your financial situation and the risk you are willing to take.

If interest rates are low when you take out a mortgage, or if you just do not want to take the risk of them increasing, you are probably better off with a fixed rate mortgage. If you have a large mortgage, whereby even a slight rate increase may mean a big increase in your monthly mortgage payment – you are perhaps better off with a fixed rate. If you are simply the cautious type who does not like taking a risk, a fixed rate mortgage is typically the best option for you.

The obvious advantage is that the interest rate does not change – and neither will the amount of your monthly payment. You always know exactly how much you will be paying each week and can thus budget more accurately; the amount of your monthly payment will only increase if the amount of insurance rates or the amount of property taxes increases. Some borrowers consider it easier to plan for other big expenses, such as college funds and retirement, with a fixed rate mortgage.

A fixed rate mortgage does not take into account the cost of living or inflation. In other words, as time goes by and you are perhaps earning more money and everything else costs that much more – your mortgage payment is going to stay the same. Arguably, this can mean more money in your pocket – in 20 years from now, you may be earning more money than you are now, but your monthly house payments are going to stay the same.

The biggest disadvantage of a fixed rate mortgage is that you run the risk of missing lower payments when the interest rate goes down. The difference in the amount that you pay each month can be substantial if you have an adjustable rate mortgage and the interest rate is lowered. This not only saves you money each month, but also potentially helps you pay off your mortgage sooner. Of course, nobody can ever accurately predict when interest rates are going to drop, although it is sometimes possible to have some indication and base your decision upon that.

A change in the interest rate can make a huge difference in determining the amount that you end up paying for your home. A homeowner with a 30-year mortgage can enjoy average savings of around $50,000 over the term of their mortgage with the interest rate being lowered by just one point. And an increase in the interest rate of just one or two percent can mean monthly payments that are between $50 and $250 higher, depending on the cost of your home. The decision to take a fixed rate or adjustable mortgage may also depend on whether you are taking out a 15 or 30-year mortgage.

One compromise of sorts is to take out a fixed rate mortgage and then refinance your loan when interest rates are lowered. Another option with a fixed rate mortgage (or an adjustable rate mortgage) is to pay extra each month towards the principal, thus saving a large amount in interest charges – as well as making the term of the mortgage shorter and owning your home sooner. Make sure that any extra amount that you pay is going towards the principal and not the interest.

It is a huge decision – whether to play it safe and take the fixed rate, or take a chance and go with the adjustable rate mortgage. Ultimately, the decision is yours; but be sure to get some good financial advice before deciding. A fixed rate mortgage has many advantages and disadvantages; you just have to decide which is best for your financial situation.

Mike Cole is a freelance writer who writes about economic issues and financial products pertaining to the mortgage industry such a fixed rate mortgage as well as thelowest mortgage rates.

May 20, 2017

Credit Card Debt Consolidation: Finding The Right Program – Advantages And Disadvantages

You never know when and who would need help from a credit card debt consolidation program. Sometimes unexpected circumstances can lead to financial difficulties which in turn would lead you to consider debt consolidation. Some of these circumstances are loss of job, loss in business, death of an earning member and so on. If you are finding it hard to pay off your credit card loans, then it is wise to consider debt consolidation. This is much better than bankruptcy. This article will help you with steps in finding the right credit card debt consolidation program, make you aware of the advantages and disadvantages of debt consolidation so you can decide whether credit card debt consolidation is the best option for you or not.

Basics of Debt Consolidation

Debt Consolidation is a big loan that will pay off your credit card loans. There are several ways these debt consolidation programs work. The most popular way is to take one lump sum amount of money from you (the borrower) and distribute it to your credit card companies (the lenders). All your loans will be consolidated into one payment usually withdrawn directly from your bank on a fixed date every month. These programs make the card holders life easier.

As a general rule, if you have many credit cards from different companies with high interest rates, then debt consolidation can help you manage your debt with only one bill and much lower APRs. These debt consolidation companies negotiate a lower interest rate for you and this can save a lot of money in the long run. This will work out in your favor if you have credit cards with APRs of around 30% because the debt consolidation programs can reduce these interest rates to between 12% – 18%. These programs require a monthly administration fees, which is usually around and this will come off your savings. Remember if the admin fee does not come off your savings, then it is not a good idea to sign up for a debt consolidation program.

So it looks like everything about the credit card debt consolidation is positive. Well, it is not always the case. There are a few advantages and also disadvantages of debt consolidation programs. You have to find a balance between them. The fact is that credit card debt consolidation companies do help you in paying off your debt. Here are some advantages and disadvantages of these programs.


1. Decreased payment amounts: The monthly payments will be less than what you were paying before debt consolidation because you are paying off the loan over a longer duration.

2. Simpler to manage: After you signup in the debt consolidation program, you will have a relief from reading your credit card statements, deciding how much to pay for each credit card and then making the payments one by one. Usually, the company will withdraw the money directly from the bank and you will not have to be concerned about late payments.

3. Decreased interest rates: This is one of the major advantages for many credit card owners. Some of the debt consolidation companies bring down the interest rates much lower than the current ones. This can save lots of money for you.

4. Debt Management tips: Many of the good debt consolidation give lots of free tips on managing your debt. They draw out a plan on debt management. These tips are invaluable. They even mail out booklets on debt management.


1. Lower FICO scores: Many experts debate that debt consolidation does not have any effect on credit (FICO) scores the fact is that debt consolidation has a negative effect on the credit scores. Enrolling into debt consolidation will always be reflected in your credit history. Most credit repair companies mention that it is difficult to increase your credit score if you are currently working with a debt consolidation program. Your credit scores can be raised after you have paid off the loans and are not currently in any debt consolidation program. Even if you can remove one credit card from the debt consolidation program that can help you increase your credit scores.

2. Higher Payment: Since your payments are made over a longer duration of time i.e. in more number of the years, then you will end up paying more in the long run. One way to prevent this is – if your financial situation has improved, then you can pay off larger sum of money. Most of times there will be no penalty for paying off the debt sooner than the agreed number of months. Before enrolling in a credit card debt consolidation program, you can confirm if there is a penalty or not for paying off the debt sooner than the agreed number of months.

3. Credit cards inactivation: If a credit card payment is enrolled in a debt consolidation program, then that particular card account will be inactivated. i.e., that credit card can no longer be used.

4. Negative Impact on Future Loans: Once you have enrolled in a credit card debt consolidation program, this will remain in your credit history. So, all future loan requests (new credit card applications, home loan, car (automobile) loans etc.) will involve references to your debt consolidation. i.e., the lender will have knowledge about your participation in debt consolidation program. Some people are very uncomfortable about this but it is up to you decide. Your credit history is a private record and will be provided by credit score companies only on a need-to-know basis. If you apply for home loan, then the chances of getting rejected is higher and if you get accepted, then mortgage broker will ask for explanation. Again all these conversations are kept confidential.

So, the question is – when should you consider a credit card debt consolidation? If you are paying high interest rates around 30% on a credit card, you have many credit cards, you are unable to make payments or your are barely able to make just the minimum monthly payments, you are finding it difficult to manage all the payments etc., you must consider signing up for a credit card debt consolidation program. After reading through the advantages and disadvantages mentioned earlier, make decision about signing up or not signing up for credit card debt consolidation program.

How to find a good debt consolidation program / company?

Signing up with the right debt consolidation program is critical for saving money and successfully consolidating your debt. There are a good number of scams in the debt consolidation business so it is in your best interest to proceed cautiously to prevent being victim of a scam. Here are some very good sources of finding the right debt consolidation program.

1. References from friends and relatives: It is best to ask your trusted friends if they have any recommendations for reliable credit card debt consolidation program i.e., if they have enrolled in one of these or know of anyone who enrolled in one and is satisfied. As mentioned before, there are many scams and so with this option, you can feel safe. This should be your first option.

2. Television advertisements: Most of big and established companies run advertisements on TV. These are companies that have a lot of experience and have been successful with debt consolidation. But it is a wise thing to research the company. Look for their website and check for their standing in Better Business Bureau (BBB) and must have been in existence for a few years. Also, search website for this company – this website where victims of scams post their experiences.

3. Mails: When you are unable to payoff debt on time, you will receive mails from some companies that will offer help with debt consolidation. These companies have permission to access some of your basic information. The good thing here is that your fit their profile of enrollees and that is why you received a mail with their credit card debt consolidation services. As mentioned earlier, research these companies using the same methods described above.

4. Telemarketing phone calls: Typically, telemarketing phone calls that you get is because your debt situation is such that it fits the requirement of their enrollees. If you receive a phone call, remember to never enroll in the first phone call. Note down all the details of this company such as the websites, contact person and phone number to call. Research the company extensively as mentioned above.

5. Online Research: Research the internet for good credit card debt consolidation companies both non profit and profit companies. Once you create a list of possible companies, research the companies extensively. Talk to these companies until you are comfortable about enrolling with them.

For a few months or years, if you can handle the disadvantages of credit card debt consolidation programs, then enroll in a program. Debt consolidation can get you out of your current debt problems and save you a lot of money by lowering your interest rates but if you do not spend judiciously, then you will be back into the same debt problems and this cycle will never end. So the long term solution to debt problems is to change your spending habits and live slightly below your means. Remember you need to manage the money / debt and NOT let the money / debt manage you.

The author Lokesh Kumar is a business owner, investor and has very good financial knowledge. Visit Best Credit Cards and Debt Consolidation website and blog for quality information about credit cards, debt consolidation, credit (FICO) scores and honest reviews of 500+ credit cards.

December 18, 2016

Mortgage Accelerator Program – The Disadvantages

Filed under: Mortgage — Tags: , , , — admin @ 12:46 am

A mortgage accelerator program is a system that has been used in Australia and England for over 15 years. It may help home owners pay their homes in less than half the time. However, before you decide on getting such a type of program, you need to learn about the disadvantages associated with it and whether it is the right choice for you.

First, mortgage accelerator programs cost anywhere between $ 300 and $ 3,500. The cost usually depends on what the program offers. They usually include the software that lets you know how to transfer the money and some customer support.

In this type of programs, home owners need to get a line of credit. However, the cost can usually be included in the home equity and paid as part of the mortgage with no out of cost expense to you.

With other programs, there is no initial cost associated with the program but people have to refinance their mortgages. This is good only if they can get a better rate on the new mortgage. Otherwise, the savings that you may realize with the mortgage accelerator program may be canceled by the extra interest.

Also, in order for the program to work at its best, the person must have some extra cash available. It doesn’t necessarily mean that the owner has to pay any additional money. However, having that extra cash in the line of credit helps reduce the amount of money that interest is charged over.

As with any other financial tool, commitment in the system is fundamental. For it to work, the person must be sure that they will follow up with it. Otherwise, it is just wasted money. It helps that these systems usually come with software which indicates how quickly you are paying off your mortgage.

Of course, to take full advantage of this type of programs the home owner needs to stay in the home long enough. If you plan to move out of your home shortly, it may not be a good idea for you to get one. However, some programs allow you to use the system in up to three homes.

As with any financial tool, it’s a good advice to learn as much as you can about how it works. That way, you can know about the advantages and disadvantages associated with it, and decide on your own whether a mortgage accelerator program is the right choice for you.

August 31, 2016

Advantages & Disadvantages of Debt Consolidation Loans

Filed under: Loan — Tags: , , , , — admin @ 12:47 am

It is very common to consolidate debt with a consolidation loan. Normally, people apply a loan that equal to the sum of their existing debt amount to pay off all their debt and then focusing on one monthly repayment to work their way out of debt. But, using a consolidation loan to resolve a debt issue may not be a perfect solution for everyone. There are a few disadvantages of debt consolidation loan besides its advantages that benefit the borrowers. You should consider these factors when deciding to consolidate your debt with a loan.Disadvantages of Debt Consolidation loansMany of consolidation loans are mortgages, which will attach to your property. You may put your home at risk if you can afford to pay the loan. The lender will foreclose on your home when you default the loan repayments for months as stated in your loan agreement. Therefore, if you decide to sign up a consolidation loan that needs to be secured with your assets, then you have to make sure you can afford the payment.A consolidation loan may cause you to pay more in total debt payment even though it has lower interest rate than your existing debts. For example, you have a few credit cards that are charging at interest rate of 20%, but the balance for each card is rather small, say under $2,000. You can choose to pay extra bucks each month toward the balance so that you can clear them off fast and save some internet. Or, you may consolidate these balances with a consolidation loan that has lower interest rate, and taking a repayment period of 10 to 15 years to clear it. At a glance, it looks like you are paying less with smaller month payment and lower interest. But, if you sum up the total payments that use to clear the debt, you will find that you are paying much more than if you paid the debts with consolidation.Advantages of Debt Consolidation loansIf you are getting behind on credit card repayments that cause extra finance charges such as late payment fees and over-limit fees (if you exceed the maximum limit allowed by the card); and, you find difficulties to keep the payment up-to-date, then a debt consolidation loan will benefit you. It will help to bring your debt back to current status, avoiding finance charges that cause you to pay more; and preventing your credit score from being hurt.You can take all of your debt and put them into a low interest-rate loan for a longer period of time by enrolling into a right debt consolidation program that fits into your finance needs. It will lower your monthly repayment and bring your finance situation back to a manageable level. The advantages of debt consolidation loans have benefited many debtors who have an overwhelming debt issue. It enables them to relax their high-pressure debt problem to a comfort level, giving them opportunity to re-schedule their debt payment and works a way out of debt.SummaryA consolidation loan can be used to resolve a debt problem, which will benefit debtors who are looking for a way out of debt. However, it is not a perfect debt solution as its disadvantages may cause them to pay more or lose their assets if they default the loan.

July 27, 2016

Bad Credit Debt Consolidation Loan – The Advantages And Disadvantages

Filed under: Loan — Tags: , , , , , — admin @ 12:47 am

Bogged down by too many loans to clear off? Are you a victim of a bad credit history and finding it hard to get any more loans? Are you looking for a single loan that will consolidate all your high interest debts? Then the solution lies in a bad credit debt consolidation loan. As the name suggests this loan is specifically for those with a bad credit history and it gives the freedom to repay one single consolidated loan every month at a lower rate of interest.

There are a few types of loans that can act as a bad credit debt consolidation loan and they are secured loans (e.g. against property), personal loans and credit card balance transfer. The rate of interest in all the three varies quite a bit and it is important to understand each loan and choose the one that suits your needs best.

The advantages of a bad credit debt consolidation loan:

1. Finances made easy: The bad credit debt consolidation loan is one single loan that will take over the other small and usually high interest loans. These consolidated loans are usually at a lower rate of interest as compared to the many small loans you had previously. Since it is one loan that you need to pay off every month, it saves you the hassle of remembering the number of loans to pay off.

2. A single defined loan term: Since this is a single loan that consolidates all the other loans there is a defined time frame within which you have to pay it off.

3. Stop creditor harassment: Creditor harassment can be daunting. The innumerable phone calls asking to repay the loan can drive anyone up the wall. The bad credit debt consolidation loan can save you from the constant harassment of creditors.

4. Chance of getting more money: With a bad credit debt consolidation loan there is always a chance of getting a higher loan than what you have to pay off. This can be a blessing when you are in a bad financial state. Unsecured loans however have a defined limit.

The disadvantages of a bad credit debt consolidation loan:

1. Fear of losing house/property: If you don’t repay the secured loan on time there is always the fear that you might lose the house/property you have given as security.

2. Cumulative interest: If you increase the time span of your loan there is always a chance that your cumulative amount of interest to be repaid will increase.

3. Excess borrowing: With a secured loan you can get too much money in your hands that you may overspend. You will be able to afford a car you wanted to buy or a holiday you wanted to go to. This will increase unnecessary expenditure thus causing more problems.

4. Extra charges: There are usually extra charges that need to be paid with the bad credit debt consolidation loan and this may increase the total amount that needs to be paid and the financial burden ultimately.

Bad credit debt consolidation loans should be taken after due consideration and all the pros and cons must be looked into carefully.

April 8, 2016

Student Debt Consolidation Loan – The Advantages And Disadvantages

Filed under: Loan — Tags: , , , , , — admin @ 12:46 am

Higher education is very expensive and not everyone can afford it. Everything from accommodation to tuition fees and books has to be paid for. To pursue our dreams and go to the university we always wanted to, student loans come in handy. Their rate of interest is lower than the normal rate of interest and the time for repayment is also significantly higher. We sometime take more than one student loan to help us with our finances during college. Paying the interest for different loans every month can be a daunting task and student debt consolidation loans come in handy.

A student debt consolidation loan is one in which all the smaller student loans are combined into one big loan and the student has to pay off just this every month. There is only one repayment period and one due date to make the payment. The student debt consolidation loan’s interest is also significantly lower and you can save precious dollars every month. There are two basic types of student debt consolidation loans and they are federal student consolidation loans and private student consolidation loans.

Advantages of student debt consolidation loans:

1. The rate of interest on these loans is fixed and it has a significantly lower rate of interest than the other loans combined.

2. There is just one loan to pay off so remembering the due dates will not be difficult.

3. You can have an extended time of repayment of the loan and this can go up to 30 years.

4. As the time frame to pay off the loan increases the amount that needs to be paid off every month also reduces significantly.5. You don’t have to pay any extra fee to consolidate these student loans.

6. The application process for this consolidation loan is also much simpler and there are no penalties for paying back early as well.

Disadvantages of the student debt consolidation loans:

1. Extended payment periods may make it seem that very little money is flowing out of your pocket but in the long run you will end up paying much more than you borrowed.

2. It is extremely important to be very careful about the amount of interest you have to pay on a consolidated loan. It can happen that the rate of interest is higher in the consolidated loan than the other individual loans. In this case taking a consolidated loan is more of a disadvantage.

3. When taking a consolidation loan, you should also consider the remaining tenure on your various loans. This is especially important when you are taking a consolidation loan for the purpose of consolidating your payments into one (rather than due to financial problems in paying back the loan). If most of your loans are nearing the tenure completion, you would not gain from consolidating such loans.

4. Consolidating the loans within the grace period will require you to pay it off immediately.

Student loans have helped millions of students pursue their dreams and become what they are today. Student debt consolidation loans help them ease the financial burden to a great extent. The pros and cons must be evaluated carefully before choosing to consolidate the student loans.

August 19, 2013

What Are the Advantages and Disadvantages of Debt Consolidation?

Filed under: Debt — Tags: , , , , , , — admin @ 12:47 am

Debt consolidation is something that people turn to when they are unable to make their monthly payments on their unsecured debts. These debts include personal loans, credit cards, and anything else they owe money on that did not require collateral when the credit was extended. While this sounds great, there are some advantages and disadvantages that you must be aware of when you take out a debt consolidation loan. This is so that you can determine whether or not this is the right move for you to make.
The advantages
The advantages are quite obvious. If they weren’t, so many individuals would not turn to debt consolidation as a way to get themselves out of debt. The advantages are:
– Instead of paying many monthly payments on your unsecured debt, you are only paying one payment per month.
– The interest rates are lower, but it is possible that the long-term debt may not be reduced.
– If you compare the amount of a debt consolidation loan payment and the amount of all of the individual payments that have been made each month, the debt consolidation loan payment is cheaper.
– There is only one creditor involved instead of multiple creditors.
These are fantastic advantages in that they make debt consolidation seem like a wonderful idea. However, it is also a good idea to be aware of the disadvantages because these can alter your decision regarding debt consolidation. Then again, they may not alter your decision at all.
The disadvantages
There is something to be known about debt consolidation loans. Although the debt that has been paid off by these loans are unsecured debts, the consolidation loan must be secured. This means that the loan is secured by an asset such as your home or a piece of property that is the same value as the loan. This means that defaulting on the loan could result in you losing that piece of property. If the asset is your home, then that means you will lose your home if you do not make your loan payments.
And although the interest rate is lower, the loan is for a longer term. Having a longer term loan means paying interest for a longer period of time. This can cost more money by the time it is all said and done. However, it also depends on how much your interest was on credit card debts. Sometimes, an individual can have a debt consolidation loan that could be paid off quicker than a credit card with a higher interest rate. It simply depends on your individual debt on whether or not it will actually cost you more in the long term.
There are, however, some disadvantages that you can avoid. Those disadvantages are:
– Closing your accounts after paying them off can hurt your credit score because the more unused credit you have, the better. This means keep them open.
– Many individuals feel that they can use their credit accounts after paying them off. This simply increases debt. Leave them open, but don’t use them.
Are they for everyone?
The truth is that debt consolidation loans are not for everyone. People must take into consideration the debts they are paying off, their ability to pay the loan, and if they can afford to lose the property that they would put up as collateral on the loan. For some individuals, it may be the right move to make. For others it can be a huge mistake. That is why it is important to evaluate the advantages and disadvantages and see if you can deal with the disadvantages. If you can, then you are a candidate for a debt consolidation loan.

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