PostHeaderIcon Has anyone tried a debt consolidation loan?

have you tried any of these loans? i am trying to consolidate $10,000 of high interest credit card debt and $15,000 auto loan into one low rate loan.
what is your advice?

i would prefer some REAL answers, but smart-assed comments are always welcome.

9 Responses to “Has anyone tried a debt consolidation loan?”

  • aldo67uk says:

    The repayments are affordable however you end up paying alot more money back over the piece. However, its worth it to make the repayments easier on you, just don’t look at the final figure you are paying…………… good luck.

  • loulou says:

    Make sure you get a good APR and look at what your total repayment figure is. Set your budget first so you know exactly how much you can afford to pay each month, without leaving yourself short.

    If you consolidate, you must pay off the two other creditors immediately. Cut the credit card up – do not use it again. Do not be tempted to part-pay the other debts so you have some “spending” money. You must pay off the old debts.

    Once you’ve consolidated stick rigidly to a strict budget, which should include a savings element (even if it’s only $50 per month).

    I wish you luck and good fortune.

  • Rob F says:

    A debt consolidation loan combines all your existing repayments into one affordable payment, which from an administration, time and cost point of view, makes it an attractive option.

    However such loans will always achieve this by extending the length of time in your life in which you are in debt and the total amount of money which you will repay over that time.

    In simple terms, you are re-structuring your debt by taking further longer term credit at higher interest rates from the consolidation company. You are really increasing your debt.

    Despite this obvious negative, people do it because they do not understand this implication and because it feels good to get rid of existing often lower rate but higher monthly repayment debts.

    Sometimes the consolidation loan will also be secured against, for example, your property, where a credit card or auto loan are un-secured, so it actually places you under greater risk.

  • RAY says:

    Debt consolidation can be a good idea only if your intention is to get out of debt, not to realize you then have $15,000 in debt and rack up another $10,000 in credit card debts with the cards that no longer have balances. I don’t think it’s wise to consolidate the auto loan because the odds are that’s at a lower rate than a consolidation loan will offer for non-secured loans. Why pay 12% for the car portion if you are paying 8-9% now? You may want to call your credit card companies and ask them for a lower rate. Seriously they would rather take 6% than 0%. Speak to supervisors, not the people who answer the phones. It can be done. Be honest. Arm yourself with what rates and terms for credit card offers are out there. ( If you miss a payment, your rate will go right back up again. Do any of your cards have annual fees? Get them eliminated as well. It’s not practical to pay $20-$50 a year just to borrow money that you are paying interest on. If you do consolidate, don’t just make minimum payments. Get out of debt. You will be far better off making a rate of return than paying a borrowing rate. Analyze your wants from needs and don’t buy on credit cards what you don’t need. It’s one thing to pay for car repairs on a credit card but another to charge for a vacation or dinners out. Seriously take an hour on the phone to lower the credit card rates and terms you have currently and then shop around for a consolidation loan.

  • SALLY C says:

    get someone numerically literate to work out for you:
    how much in total $$$$ you will pay over the full term of the loan – is it really lower cost overall? in reality, debt consolidation loans often push the length of the term over a longer period, so the monthly cost and interest rate looks better but you pay more because the number of years is longer.
    Debt consolidation loans are only suitable for about 8% of the people who take them (industry survey in UK last year)
    The biggest risk is these loans are secured against your property and you could lose your home etc if you default, and the penalties if you get into arrears can be bad – losing your job cannot always be predicted !

    My best advice is to talk to your local credit union, they are ethical lenders who will not try to rip you off.

  • eccentriclady says:

    Stay away from consolidation loans!! Those companies are not there to help you they there to make money. When all is said and done you will be further in debt. The loan consolidators/legal loan sharks charge a lot of meny to consiladate your your loans. You will end up paying a lower monthly bill(although not by much) for a MUCH longer period of time. On top of that if for ANY reason you missed your payment the interest rates go through the roof. What I ended up doing is electrinically depositing my pay check and having my loan payments automatically deducted from my account. This way I never even see the money I have to pay out. If I keep doing it this way I will be debt free in 22 more months.
    Good Luck to you,

  • jititi j says:

    Consolidating your debts would increase your repayable amount and time…so think before you consolidate. Here is some information which would be of your help:

    Ways to Consolidate Debt

  • Evann says:

    My advice is to get a job and you could afford to pay your bills.

  • Studly says:

    RAY offers you some excellent advice.

    When I answer these types of questions, I always start with this warning. Once you have consolidated loans, you MUST quit using credit cards. Over the past few years, banks have offered these loans very willingly. People would take advantage of them, then turn right around and use their now-empty credit cards and max them out again. Now they are in twice the amount of debt they started with.

    Thousands of people have filed for bankruptcy for this very reason last year. So unless you are sure you can control your spending, NEVER get these types of loans.

    And very few banks will give you a large loan without some backing, such as a car or home. If you own a home and have equity in it, you can get a home equity loan. The advantage is the interest rate is fairly low, and the interest is tax deductable. But the danger is you will lose your home if you can’t repay the debt.

    Unsecured loans will have a much larger intererst rate. But the advantage is you can combine/spread the payments over a certain period of time, making your overall payments more reasonable. But finding unsecured loans for your size debt isn’t easy. You better have a very good job.

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