When You Should Consider A Debt Consolidation Loan

By Author: Belinda Darling
Total Articles: 152
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If you have found that your debt has gotten a bit out of hand, you may be considering a debt consolidation loan. Debt consolidation loans are loans that you may qualify for that will take all of your existing debts, such as mortgage, credit cards, small business loans, store cards or any other debt you may have and lumping them all together. Sometimes all of your other debts or many of your other debts will be repaid on the spot, but you will need to pay off that debt consolidation loan instead.
Some of the reasons people may get debt consolidation loans is if they are looking for an alternative to bankruptcy, if they have a lot of high interest credit cards they are struggling with or if they are simply looking to save some money. Often times a debt consolidation loan can save $100s per month, which you can use in other ways.

In order to get debt consolidation loans, you usually have to have equity, such as a mortgage on a home. Not only is this sometimes a requirement of certain companies, but it could actually make your rates a bit lower, which can be quite an advantage. Depending on your personal situation, ...
... there may be rules or provisions on the loan as well. For instance, if you are facing bankruptcy and this may be the only option, the lender can and will discount the loan. There are, of course, other provisions as well, but many of them will be designed according to your own situation.

There are some things you should be cautious about when it comes to debt consolidation loans. For instance, using the example of bankruptcy above, if you end up choosing to get a loan for debt consolidation then still find that you need to declare bankruptcy or need to a few years down the road, you may not be able to, since you got the loan. Another concern with these types of loans comes when you consolidate debt that is unsecured into a loan where the debt is secured. Your monthly payments will likely be smaller, but the amount you have to pay back will be much larger.

You also may want to consider the reasons you are consolidating in the first place. For some people, they have simply legitimately gotten in over their head due to loss of job or medical problems that have enabled them not to work. For others, they may have a problem with out of control shopping, for example. For these people, you should probably seek credit counselling first, before taking any drastic step like applying for a loan for debt consolidation.

If you think debt consolidation isn’t an option for you, there are some alternatives such as credit counselling as listed above. Other alternatives include credit card balance transfers and home equity loans. If you are not familiar with these options, seeking the assistance of a trusted bank or lender may give you a solid background on what they are and which of the choices may be best for your personal situation.

Looking to consolidate your debt? Are you concerned about bankruptcy? Come visit Victorian Mortgage Group’s website and contact one of our consultants today for a debt consolidation loan today! The team specialises in debt consolidation loans and will be accommodating to your situation.