5 Myths Busted about Debt Consolidation
In this article, we will discuss about some of the common myths about debt consolidation loan.
Debt Consolidation is an amazing financial strategy to pay off all the petty debts by taking a single loan. This will not only reduce your multiple high interest debt payments but will also tackle your payments without reducing your credit score. You can easily clear the list of multiple debts like consumer debts, house installment; credit card bill payments etc. by consolidating with a personal loan are available at affordable interest rates and also ensure a hassle-free debt settlement.
Debt Consolidation is quite expensive: Most of the people are scared to use debt consolidation as they think that these are quite expensive and carry high rate of interest. But in reality, all the debt negotiations can be paid off by using a one-time debt consolidation loan. It does not carry extra charges and the rate of interest varies from lender to lender but is usually lower than the rates of average credit cards.
Debt Consolidation reduces debt: It is often believed that debt consolidation loan leads to reduction in the debts by the payment of all the small debts through the means of a single loan. But, in reality, it is not true. You might get relieved from all the petty payments but you still have to make a monthly payment for debt consolidation along with some interest. Debt settlement is a technique wherein you can request the creditors to lower down the debt amount but this will lead a negative impact on your credit score.
Debt Consolidation is similar to debt management plans: Moreover, debt consolidation is a bit different from debt management plans. Debt Management plans is offered by credit counselling service agencies who take monthly payment for the payment of all of your creditors and acts as your financial credit handler. These agencies strategically work with the creditors and help in speedy payment of debts.
Debt Consolidation hurts your credit score rate: It is true that there can be a sudden fall in your credit score because of the closing of existing accounts or the opening of new credit through loan consolidation. But in the long run, if you reduce the amount of the money that you owe, it will gradually recover your credit scoring. Also, the most important part is where does your score lands in the end and it is but obvious that your score will be better once you are debt free.
Debt Consolidation process is time-consuming: The debt negotiations might take up a week or two for processing all the documents and to provide the full funding into your bank account. But if you prepare your financial statements and bank reports before applying, then it can quickly speed up the process. Also, you can try the online debt consolidation websites in order to reduce the time of verification and processing.
At Credit720, our experts will help you achieve Debt consolidation loans in a hassle-free manner. Tell us which myth you used to hold about debt consolidation before reading this article?