subject: Debt Consolidation - 3 Major Risks You Should Know Before Consolidating Your Debt [print this page] Debt Consolidation - 3 Major Risks You Should Know Before Consolidating Your Debt
The Dangers of Debt Consolidation
Whilst consolidating all your debts into one with a debt consolidation loan may seem like the perfect way to relieve the financial pressure you are under, it can be fraught with risk.
But a debt loan is supposed to enable me to pay off all my high interest rate debt with a low interest loan I hear you say.
Well, whilst a well constructed debt management plan may do just that, many exist just to entice you into another loan that may have all kinds of hidden things in them that can come back to bite you and make your financial woes even worse.
3 Major Risks Associated With Getting a Debt Consolidation Loan
Hard Sell Debt Lenders
These are the lenders who entice you with all sorts of benefits, promising to take care of your debt with an easy to get loan.
They have already seen that you are an ideal candidate who has probably defaulted and is well behind in your payments & cannot therefore procure a loan through normal main stream banks & financial institutions.
They therefore sign you up for a loan at a high interest rate which is more than likely a lot higher than that at which your current loans are at with the result that your debt problem has just increased with no reasonable way out of it.
Too Good To Be True Lenders
These are the guys who prey on people who are desperate and tell them everything they have been dying to hear.
They promise things like never having to worry about your debt again as they will take care of everything.
Unfortunately they forget to mention that they charge handsomely for their services, which you end up paying for, and in some cases they even "forget" to make the monthly payments for your accounts - this just makes things worse for you even though you are paying for this service to magically make all your debt problems disappear.
Security
This is a biggy - to get a debt consolidation loan you are usually required to put up your house as collateral and if you default on your loan repayments for whatever reason you definitely stand a good chance of losing it.
If you are an unreliable payer a debt loan may cause bigger problems for you as this type of solution needs to be managed very diligently.
So if you are desperate to get rid of your debt with a debt consolidation loan, just be cautious & aware of the risks when someone promises to crunch all your debts into one with easy payments - there may be more to it than it seems.
Finally, debt consolidation is a viable solution for many who are drowning in debt just make sure you understand the risks.
PS - Go to the following link where you can read this comprehensive report (free) on the 5 Significant Risks Associated With Debt Consolidation Loans here...
