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Debt Consolidation Loans

Debt consolidation loans are used by many people as a strategy to help alleviate rather stressful financial situations. Yet, there are several things that most people exploring this type of debt elimination strategy overlook when considering a consolidation loan. Let’s take a look at a few that, if ignored, can come back to haunt you.

1. Securing unsecured debt: This is a big one. During tough financial times, people looking for help will try to get one loan to pay off other loans. This is essentially what a consolidation loan does. You take out a loan against the equity in your home, a secured debt, and use it to pay off unsecured debts like credit cards. The reason you’re able to lower your monthly payments is because secured debts carry less risk than unsecured debts, and they’re based on simple interest instead of compound or revolving interest loans like credit cards. And a mortgage uses something called amortization tables that spread out over 15 to 30 years, which also adds to the ability to lower payments.

Debt Consolidation Loans

You take several credit cards, and maybe a car payment or two, and lump them into one loan that’s secured by your home, and the result is a payment that saves you hundreds of dollars. At first this can seem like a lifesaver. But this can lead to creating much bigger problems. For instance, unless you cut up those credit cards and never use them again, you could be digging yourself a much deeper hole. And unless you can resist the temptation to trade in your car (hey, you now “own” it - don’t you?) for a new one, you’re opening yourself up to creating an even greater financial mountain to climb than you’re facing right now.

2. You’re not ending a problem, you’re beginning a commitment: Most people think that using consolidation loans to restructure their payment situation is the end of their financial problems. But this isn’t really the case.

When you sign on the dotted line and you acquire that new loan that seemingly gets you into a lower payment scenario, you haven’t ended a problem, you’ve begun a commitment. Each new loan will require between 180 and 360 consecutive monthly payments that you’re NOT going to be able to miss. This simple fact can get swept under the rug by the current financial stress you’re experiencing. But it’s a reality you simply can’t avoid. Consolidation loans carry an obligation that will last either 15 or 30 years! So, don’t let this little reality slip by.

3. Flexibility, out the window: Let’s face it, using a consolidation loan to restructure your debt payments will mean that the new obligation you’re committing to will also provide much less flexibility than you now have. If you run into trouble again in the next 15 or 30 years, skipping a payment will be VERY difficult. But, skipping a payment on an unsecured debt, while not advisable when you can avoid it, is easier to do then skipping a payment on your mortgage. So, you’d better be sure you’re financial situation is rock solid now, and will be for years to come.

4. Are you really getting the loan you need, or just the loan the broker wants to sell you?: Imagine you’re a mortgage broker, and you have to choose on working on a loan for either $50,000 or $250,000. You’re going spend the same amount of time on both files, but, one will generate much more in mortgage fees than the other. Which one will you focus on. Or, if you have the option for a smaller loan like a home equity loan or second mortgage, for just the amount to pay off your unsecured debt and maybe a car (e.g. $35,000), chances are the broker isn’t going to be that interested unless he can refinance your entire home into a new first mortgage. These loans are usually easier to underwrite and provide better compensation for the same amount of work. But how would you know anyway…

5. How long will the loan process take?: I’ve talked with owners of many mortgage companies and they all tell me the same thing. There are mortgage products “out there” that offer quick turn around and very low rates. But when you read the fine print, quick turn around is only possible when every single shred of documentation is provided right away. I’ve seen many times when those quick 3-day turnarounds turn into 3 or 4 weeks (sometimes even more). And all the while your financial problems don’t go away. While you’re scrambling to get whatever paperwork together necessary, all of the bills you’re hoping to resolve keep coming. And if you don’t keep up with those payments, you could be putting your chances for that new, consolidation loan, in jeopardy.

Days can turn into weeks, but your current obligations and responsibilities can’t be put on hold. After all, if you miss any payments at all (you know, the ones you’re already having trouble with), you could disqualify yourself for the loan you’re hoping will be the answer to your problems in the first place.

6. What kind of rate will you qualify for?: There are very low rates available these days. But few people ever really qualify for them. You get lured into the new opportunity only to find out, after all the paperwork has been completed, that you don’t qualify for the rate you were hoping for. But the one you do qualify for still saves you a few bucks, so you take it anyway. And you find yourself questioning if it was worth it to begin with...

If you’re struggling to make ends meet, and you’re considering a consolidation loan as the answer to your financial problems, hit the pause button, and consider this:

You could be securing unsecured debt.
You could be starting a brand new financial obligation that will take 15 to 30 years to satisfy.
You could be creating a less flexible financial situation than you have right now.
How will you know you’re getting the right product, one that’s in YOUR best interest, not the broker’s?
You could be committing to a process that might take longer than you’re hoping for. And while you’re enduring this process, your financial obligations won’t go away.
You really won’t know what rate you’ll qualify for until after you’ve completed all the paperwork.

But, there is another way…

The trained and certified representatives of Superior Debt Relief can help you discover if you qualify for their debt settlement program in a fraction of the time, and with a fraction of the red tape that consolidation loans require.

If you’d like a free, no obligation consultation with a Superior Debt Relief Services, just call 877-810-8995 or fill out the short form at the top of this web page. They’ll contact you as soon as possible and help you discover how debt relief program can help provide you with the assistance you truly need.

Debt settlement is Superior Debt Relief Services specialty. They’ve been in business settling debt since 1998. They settled tens of millions of dollars in consumer credit card debt for less than 50 cents on the dollar. I’ve worked with them for years, and have always found them to live up to their name. If you want sincere, honorable, and trustworthy help from a company dedicated to putting YOU first, then submit the information requested above, and a trained and certified representative from Superior Debt Relief Services will get in touch with you to help you understand if credit card debt settlement is for you.

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