Consolidation loans are a great way to manage your debt. If you can get one, it may be a great strategy for you to help you get out of debt.
Using a consolidation loan to manage your personal debts will:
Consolidate your personal debts into one monthly payment
Reduce interest charges
Will not damage your credit rating
I recommend getting a consolidation loan to many people, but it’s not always the way to go as they are often difficult to qualify for.
In order to qualify for a consolidation loan, you:
Must have an excellent credit rating
May need to have collateral as it is often required (house equity, car, etc.)
May need a co-signer
Another issue with consolidation loans is that they aren’t always a complete solution. All personal debts aren’t necessarily covered in a consolidation loan, so you may have several debts that still need to be dealt with outside of your consolidation loan.
Finally, payments aren’t always affordable. Consolidation loan payments include 100% of amount owed PLUS interest, resulting in higher payments than other debt settlement options.
So, when is a consolidation loan a good option?
They are a good option if you have:
More assets than personal debts (not insolvent)
High income and can afford to pay all debts including interest
Own assets that can be used as collateral for loan
An excellent credit rating
If you’re wondering if a consolidation loan is the best option for you, contact our office for a free initial consultation. We will review all of your options with you so you can make the best decision based on your personal situation.
