Debt Consolidation - Use caution with
consolidation is the solution people automatically tend
to think of when facing problem levels of personal debt.
At first glance, it makes sense to lump several smaller,
high interest-rate accounts into one monthly payment at
a lower interest rate.
say you owe $25,000 on five different credit card
accounts. The average rate of interest is 25%, and
you're paying $525 in minimum payments every month. At
that rate, it will take around 20 years to retire the
debt, and you'll have paid back more than $120,000! So
why not consolidate debt by borrowing $25,000 from a
lender at a much lower rate of interest, say, 12%? Then
it will take less than six years to retire the debt and
you'll only have paid back around $34,000.
It sounds great in theory, but there's one huge problem:
Who will lend you the money at that low rate of
interest? The odds are greatly against your being able
to borrow enough to satisfy the balances on the smaller
accounts unless you borrow against your house. This is a
very risky strategy. It's quite popular, of course, but
that doesn't make it safe. Why? Because you'll have
traded unsecured debts (which are backed only by your
signature and not tied to your home or property) for
secured debts (which are usually backed by your home).
That means if you run into trouble again and have
difficulty making the payments on the new loan, you
could lose your house to foreclosure!
almost always a bad idea to pay off unsecured debts
(like credit cards or medical bills) by borrowing
against your house.
Remember, you got into trouble in the first place by
borrowing money, right? You cannot borrow your way out
of a debt problem without creating another debt problem!
debt consolidation is the process of combining a number
of debts into one major debt payment. The advantage of
doing this is to save money on interest payments.
Instead of paying off a number of different interest
payments every month, you will only pay one central
interest payment. Normally this means that the interest
payments are lower and your debts can be paid off
offer at Liberty Financial goes one step better. The
problem with debt consolidation is that it doesn't
remove the debt, it just moves it to a different
location. Depending on the number and amount of debts
owed, a consolidation loan can be quite expensive,
meaning you won't be able to fully pay off the loan for
years to come.
meantime, you will be accruing more debts. It's not as
though your payments for life's necessities will come to
a standstill. You will still be building up debt via new
credit card bills and perhaps new car payments or
mortgage payments--in addition to the amount you will
owe for the consolidation loan. As you can see, this
isn't the most effective alternative.
THE LIBERTY FINANCIAL SOLUTION
Not everyone will qualify for a debt consolidation loan.
Our service is built for people in dire economic
circumstances--$10,000 in debt or more. People in this
situation might be turned down for consolidation.
Instead, try our service--we can reduce debt
significantly. After that, you can try a debt
consolidation loan with a much lower debt level.
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