Taking out a debt consolidation loan involves a number of risks, especially if you are in financial trouble. We’ve listed just a few of them below, so we urge you to read carefully and then decide!
If you don’t take the time and effort to figure out why and how you incurred so much debt in the first place, taking out one could be the worst financial decision you ever make. You could be struggling with poor self-control or self-discipline.
In which case, having access to one would not be a good idea at all, given your tendency to overspend.
You may be tempted to take the highest amount, if your application is approved for a debt consolidation loan.
Just remember, some accounts may be high interest, but not all of them. Even if one of your accounts is low interest. You will end up paying a lot more at the end of the day, if you take out one. Irrespective, it is just more costly in the long run!
Is the convenience of making one monthly payment worth losing out on a whole lot of money? I think not! Besides, debt review offers you this same convenience and saves you money.
In order to figure out which lender can offer you the best rates and terms, you would have to apply with a number of lenders.
However, many of these lenders may insist on pulling hard inquiries, which would then be listed on your credit report and impact your credit score negatively.
You may be charged origination and pre-payment fees, and these may be deducted from the actual loan amount you are getting. Moreover, if you have a poor credit record, you will be charged a higher interest rate over a longer term.
This means your total repayment will be much higher. Are you sure you want to be paying off debt for such a long period of time? Can you afford your monthly payments, without sacrificing your living standards?
These questions reveal just how bad of a decision a debt consolidation loan can be. We urge you to get in touch with NDA to find out what all of your options are, in order to make an informed decision!