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Debt Consolidation: A Constant Companion of Our Everyday Life

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By: meen1962
on 26th May,2014

Living a debt free life is a major milestone for most people nowadays.
Debt Consolidation: A Constant Companion of Our Everyday Life


Living a debt free life is a major milestone for most people nowadays. This is because debt has been a constant companion in our everyday financial pursuit to make a good living. At one, point or another, we had to fund a significant moment in our life- like college, getting a house or medical situations by borrowing financial resources from other entities. This could include banks, lending institutions or as simple as advancing cash on your credit cards. Whatever the need was and how much the amount is, debt is something we want to wipe off clean from our records.

People keep searching for the best options to get rid of their accumulated loans. Debt consolidation is such a wonderful service that enables a person to pay off his debt with low interest rates. If a person has too many loans and pending payments he can do it with a single debt consolidation. Here the interest is low as compared with the other loans. So a person can be relieved from his higher interest rates for example, a credit card payment would have a higher interest rate than the other loans.   Debt consolidation also helps him to pay off his debts sooner as it is possible to him. Here a person is made free from his un-affordable payments to an affordable one.

 

Sometimes debt consolidation can work as a risk factor:

Temptation to acquire more debts: This is the most prominent risk. Most failures result from the delusion that you have less debt than you thought. The single payment scheme is the culprit for this.

Paying for a higher interest amount: Most of the debtors who failed and ended up with more debt a year or after they have started with debt consolidation loans. The problem is that they did not choose the type of loan that they got. Sometimes, the lower interest rate is deceptive.

Debt consolidation can save you money:

Working of debt consolidation: The simplest explanation way of explanation is that you use new debt to pay off old debts. We can get a bank loan and pay off all your creditors. Alternatively, you could go to a non-profit consumer credit counseling agency for help.

 

Debt consolidation loan saves money: Let's take a bank loan as an example and let's suppose you owe $15,000. If your debts have an average APR of 20% and total payments of $600 a month, it would take you 17 years to become debt free and pay a total of $25,611. On the other hand if you were able to take out a debt consolidation loan at 9.95%, you could be debt free in 48 months, and would pay a total of just $18,112 or a savings of nearly $7,500. You could be debt free 13 years faster.

 

It is always important to think critically about your own debt. Some people think that they need to consolidate when they can really just talk to creditors directly. Finding the best way is easiest when you understand your personal needs.

Once you are able to determine the best debt consolidation ways that are available, then you can let go of the stress caused by financial hardships. Any person deserves to live a healthy life where they do not have to constantly worry about bankruptcy. Just because a person is having a hard time with their finances does not mean that they can never find a solution that is right for them.

 

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