As with most endeavours, there are the inevitable pros and cons that must be considered before delving headlong into mystery. Personal loan debt consolidation carries with it several redeeming attributes, but also comes with a few caveats of warning.
Once your debt has reached a level that causes you to resort to personal loan debt consolidation, you need to act prudently and swiftly. Gaining as much knowledge as possible in a short amount of time is crucial to your financial stability, so compare the pros and cons and make an educated decision.
Trying to get yourself out of debt can be a rather onerous endeavour. There are many people the world throughout that are saddled with uncontrollable debt, and they are all trying to figure out the best ways to doff the constraints of financial crisis.
Debt consolidation is one of the major ways that people are scratching and clawing their way back out of the pit of despair that they have sunk into. Personal loans may well be the best method, but it does come with its own inherent set of pros and cons.
The best reason for a personal loan debt consolidation plan is that you can house all of your existing debts into one tidy pile. This eliminates many hassles and difficulties for the person shackled to the outstanding credit card debt. With a personal loan debt consolidation, you can gain a measure of clarity in terms of how much money you owe, and figure out a time table for repayment that will get you out of debt, and back onto steadier financial ground.
Personal loan debt consolidation also comes with much lower interest rates, which is a massive pro for those people seeking financial advice and assistance. The lower interest rate means that they are placing more money towards the principal amount owing than when they had multiple credit cards draining their bank account. As time passes, your debt becomes more noticeably depreciated, and this can give you the light at the end of the tunnel.
With but one payment, it is also easier to make sure to not miss any payments, or to make any late payments. You can set up your payments to come out with automatic bill payment scheduling, and you will always know how much your payment is, and when it is due. This is much better than having multiple accounts, with different interest rates, different due dates, and a whole host of confusion to add to your stress and anxiety.
The first con to a personal loan debt consolidation is that the amount may seem overwhelming to someone that is financially inept, and they may feel as though there is no relief in the foreseeable future. With multiple credit card debts, the person may feel as though all of the balances owing are somewhat manageable, and feel as though they have some ounce of control.
While this is untrue, it may seem to be a harsh reality. The odd person may also feel as though they are tied to the loan payment, because they cannot skip this payment if money is tight. This seems to be a negative in their mind, even though the end result will help them immensely.
Another con to personal loan debt consolidation is that you run the risk of seriously damaging your credit score rating. Many consolidation companies will tear up and cancel your cards once you sign with them, but this maims your credit history, which is an integral piece of the calculation process for finding your credit score rating.
Also, if you go the way of a balance transfer credit card, the interest rate may rise at the first late payment, or the first purchase made. In this instance, after a purchase is made, the new and much higher interest rate is activated immediately, and interest is charged on the entire balance owing, which can put you right back into the clutches of the unforgiving minions of debt.
Over the course of a personal loan debt reduction, you may pay back a lot of extra money, depending on the amortization period, and this could be frowned upon by the financially naive. Debt consolidation is the best way for you to rid yourself of multiple debts, and should be done sooner rather than later.
The interest charges continue to rack up while you sit and ponder your next move, so act quickly, and save yourself a few dollars.