Debt Consolidation Can Help the Financially Savvy
Debt consolidation, where an individual takes out a new loan to replace a number of existing ones, is generally regarded as something done by people who are financially undisciplined. Despite conentional wisdom, consolidation of debt makes a helpful financial tool even by consumers who pay their bills when they are due.
Individuals with financial troubles are not the only individuals who can benefit from consolidating debt. Sharp consumers should always be on the lookout for any tool that can provide them with a financial advantage, and a debt consolidation loan can do exactly that, even for those who aren't deep in money trouble.
Many, if not most, debtors who take out a new loan to pay off current ones are in money trouble. Their rates are high on their existing debts, and they often are able to mail in just the minimum payment each month. Combining debts with new financing often permits people to lower the interest rate in addition to the amount of money that goes out each month. Occasionally, consolidation loans do lengthen the repayment timeline for a few years, but keeping the monthly payment low is the primary goal.
Financial trouble does not need to be the only rationale for applying for a debt consolidation loan, however. Some individuals are just busy, and it takes time to manage a lot of monthly bills. Along with your mortgage payment, you may have an automobile loan and a few outstanding bank card balances. Each of these expenses comes with a regular bill that is due on a different day of the month. Each of these expenses has a different rate of interest. Each of these debts has its own penalty or fee if you get careless and happen to make a late payment.
Even if you are current on your debts, you can still reap benefits from combining them into a single loan. You will only have one simple, affordable payment to make, and that would allow anyone to rest comfortably. You only have one rate of interest to worry about and only one payment to mail in each month. The new financing will result in greater ease and simplicity every month, as you will no longer have to be concerned with multiple due dates and potential fees or penalties. You will almost certainly save a few dollars by getting a lower rate, particularly if you obtain a secured loan.
Consolidating a number of existing bills with a single loan makes a lot of sense for people who owe too much money and for savvy consumers, too.
