If you’re in debt, you’ve probably asked the question: how does debt consolidation work? Maybe you’ve done some research, but still don’t quite know how it works. You’re not alone! The truth is most of us are likely to have stumbled across it in our search for debt solutions and found it a little confusing.We find it’s better to ask the question: does it actually work? Or will it leave me worse or better off than the other options out there?
Firstly, it requires taking out a loan application. This will generally involve a hard credit check, which will knock your credit score down a few points for up to 2 years.
Secondly, you receive a lump sum in your bank account, which you are supposed to use to pay off all of your creditors, with whom you have smaller debts. Giving a deeply indebted borrower lots of credit to burn is never a good idea. For anyone who thinks they need debt consolidation, it’s in fact downright dangerous!
Old habits die hard and, with the aggressive advertising we are exposed to on a daily basis, it’s far too easy to slip back into old over-spending patterns. Not to mention, the desperate economic times we are all currently facing, forcing us to make desperate decisions.
Lastly, you make one, sometimes lower but other times higher, monthly payment to your debt consolidation lender only, from then on out. But, this one payment is only lower than the grand total of all your smaller payments.
You’re still going to have to make a hefty payment every month and you’ll have to pay it off over a longer time span. Do the maths – you’ll end up paying more!
On the other hand, our mission at NDA is to ensure that making the right decision for your financial health is easy. We understand that debts can create a lot of stress. That’s why we offer a range of debt solutions, such as debt review, debt management and more. Moreover, we will recommend the one that suits your situation best.
To find out more, send NDA your basic details through our website contact form for a free callback from one of our professional consultants!