How a Debt Consolidation Loan Can Be Too Much of a Good Thing

A debt consolidation loan is a great way to combine lots of debts into one loan. You only have one monthly payment instead of many, which makes budgeting easier, and you may also qualify for a lower interest rate than you are paying on your various credit cards and loans before you consolidate.

But beware: it is possible to consolidate too many debts!

The biggest advantage to debt consolidation is to get a lower interest rate. Therefore, do not consolidate a low interest debt into a high interest loan. This sounds obvious, but I have met with hundreds of people over the years who were so desperate to get one monthly payment that they forgot about the interest rate they were paying. This is a big problem with finance companies that tell you "you can afford a small $300 per month payment" while they conveniently forget to mention that the interest rate is 30%!

Don't consolidate if you will end up paying a higher interest rate. Yes, it's convenient to only have to make one monthly payment, but it is not convenient if you end up making those payments for an extra year or two because of the higher interest rate!

A debt consolidation loan should help you solve your financial problems, not create more, so only consolidate the debts you need to consolidate. If you owe $300 on a high interest department store credit card, consolidating that debt with your other debts may seem to make sense.

But here's an even better idea: Just pay off the debt! It's only $300 dollars, so dig deep into your pockets and pay it off. If you do this with all of your small debts, your debt consolidation loan will be smaller, and you will get out of debt faster.

Getting a debt consolidation loan makes sense, but only if you have done your research first, obtained lots of debt consolidation loans information, and only consolidated the debts that give you a financial advantage after you obtain the loan.

Bernard Johnson has many years experience advising people on debt consolidation loans. Visit http://debt-consolidation-loans-information.com/blog/ for more information about debt consolidation loans.

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