What is the objective of debt consolidation?
The main objective is to get a loan with lower interest rates and lower monthly payments without risking your assets.
Debt consolidation loans are useful for people with high debt interest and who have trouble paying bills each month.
Main advantages of the unification of debts
Join all your debts in one: Suppose you have five different things, the mortgage on your house, the car loan, a personal loan and some money on two credit cards, you need to be aware of each of these debts and pay 5 bills every month. With the consolidation of debts, your 5 debts will be consolidated into one, in this way you will need to pay only one bill each month, which will make it easier to plan and budget your expenses.
Reduction of the average interest rate in the total amount: With five different debts, the highest interest rate can be up to 18% and the lowest interest rate can be 3.5%. After consolidation, the consolidated debt can have an interest rate of only 3.5%, so your average interest rate is significantly reduced and with it your overall debt and what you have to pay each month.
Debt consolidation loans can reduce how much money you pay monthly towards bills. After consolidating your debt, you pay less monthly than you currently pay by adding all your monthly payments into one payment.
Try to avoid loans that ask you to pay very high monthly amounts or that promise a very large reduction of your debt, as they are very risky.
Debt negotiation – Advantages and disadvantages
The advantages of debt negotiation are:
Debt negotiation is one of the best and fastest ways to improve your financial record.
You avoid being overburdened by your creditors.
The negotiating companies will save you money by reducing the amount of debt owed.
You will only have to make a single payment each month.
With the negotiation of your debt you will save time and your debts will be eliminated.
The disadvantages of negotiating debts are:
Your balance will be negatively affected. It will be reflected in your financial history as a negative, but it is always better than bankruptcy.
It is possible that your creditors continue to harass you during the negotiation process and may even sue you.
Some companies will only accept to work for you if you have a specific dollar amount available to you.
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