What is the Definition of Debt Consolidation (and What Are the Pros and Cons?)

So you're wondering, "What is the definition of debt consolidation?" Let me make it simple for you right off the bat. Basically a debt consolidation loan is way for you to combine all of your debts together through a single source with (hopefully) a lower interest rate.It really doesn't matter if your debt is secure or not debt consolidation is still a great way to reduce your payments. So what are some of the other Pros and Cons of consolidating your debt this way? debt consolidation loans

1.Pros:
Simplicity - This is really an obvious benefit but it really is a good one. If you are at the place where you are looking to get out of debt than trust me, you can use all the simplicity you can get. Putting all your debt into a single payment will save you the headache of trying to keep up with all your creditors and all the minimum payments that you need to make every month. This benefit alone is worth the effort and time it takes to find a good debt consolidation company to help you. debt consolidation loans

Credit Rating Stays Intact - Most people are too quick to turn to bankruptcy as their only option when it comes to getting out of debt, which really is too bad. Bankruptcy will seriously harm your credit rating not to mention the fact that I consider it "legal robbery." The beauty of consolidating is that you won't need to marr your credit rating one bit and you can feel better about not having to rob your creditors. debt consolidation loans

2.Cons:
More Payments - One thing that is often overlooked is the fact that although your overall interest rate will be lower, you will be extending your loan tenure and could be paying more interest in the long run. So for the long term a consolidation loan may become very costly if you don't choose a shorter payback period. debt consolidation loans

You Might Lose Your Car! - Another thing to consider is the fact that most loan consolidations are secured by your assets. That means that if you fail to pay up you might have to start walking to work. debt consolidation loans

Overall, though, I think the benefits out weigh the draw backs. I suggest that you pick yourself a good reputable consolidation company that is flexible in payment options and you should find yourself some debt relief before you know it.