What to Avoid

[Sir Andrew]

By the way, here are the cons. One disadvantage is that it can be difficult to find good or low interest rates. Which means if the interest rate on your new loan is the same as your current ones, then there is no need to consolidate them. Another disadvantage is that it may take more time to pay the debts. Remember, you just consolidated your debts. The amount didn't change. The only thing that did is the length of time. You could therefore end up paying more in interest if the term is really long.

[Emma Roberts]

You know, the usual. Credit cards, utility bills, mortgage. I'm doing good so far. Just looking forward.

I see. I suggest you prioritize what to pay first. That way its much easier for you.

[Emma Roberts]

Here are the pros of consolidating debts. A debt consolidation loan is very helpful if you ran up your credit cards while you were in, say, business school. This is also good if you have a couple of high interest installment loans like student loans or car loans. Doing this will allow you to put the debts into one manageable payment. Thus, you can avoid late fees, extra charges, and the bad credit that will inevitably result when you can't afford to pay regular bills.

Even with the pros, I still won't advice on doing this. Consolidating debts that is.

[Prof Henry]

I have a question. Don't they give you other advice when you consolidate debts?

They do. But if you don't change your spending habits and their advice is wasted.

[Jane Norman]

Yes, if you have a lot of debts and are struggling to pay them, a consolidation loan can be the ideal solution. For example, debts such as catalogues, credit cards and car loans can carry high rates of interest, and by, switching to one loan, you pay one interest rate on the debt - just make sure you shop around for a competitve rate .

As long as you keep up with repayments and pay the loan within the agreed timeframe, then consolidation loan can be the answer. Perhaps the hardest thing is refraining from running uo more debt - it is imperative to avoid temptation

[mattie3979]

as long as you keep up with repayments and pay the loan within the agreed timeframe, then consolidation loan can be the answer. Perhaps the hardest thing is refraining from running uo more debt - it is imperative to avoid temptation

And, surely, that is the crux of the matter. Without wishing to upset anybody, the type of person who has got into debt by spending on fripperies (as opposed to getting into debt just to survive) is likely to do the same thing over again. So loan will follow loan.

I think that in order to protect themselves, this type of person is better off considering an IVA.

Mattie

[wagnerm]

For some people, debt consolidation may not be the answer. To start with, it can be difficult finding fair interest rates. If the rate on your new loan isn't any better than the rate you pay on your current loans, consolidating your debt wouldn't make much sense.

It can also take longer to pay debts off. When you consolidate debt, you still end up owing the same amount of money. The main difference is usually the length of the term. This could leave you paying more in interest if the term is really long.