i need to know if consolidation is a good idea, my sister consolidated her loans and now with the interest added, she is paying more than she even owed. so wats good and bad about consolidating loans.
2006-08-03 07:00:29 · 5 answers · asked by lilykiss8 2 in Business & Finance ➔ Credit
i consoildated my debt a long time ago and it work well for me because having just the one payment was easy to keep in cheak. i also checked what intrest rates i was on on each of my debts and there for new if the intrest rate was lower on the loan. the more you borrow the lower rates you can be looking at so having a 1000 here and a 1000 there can be higher then having it all together. but what you also have to look at is what you are paying off, if it is a credit card then you can clear that with no penaltys but if you are paying off other loans then you can find (depending on how long you have left on that loan) that you have payed nerely all the intrest already and there for if you can it is better not to move it.
the reason for this is some loans are what you call front loaded, this means you pay more off the intrest at the begining then at the end ie, your payment is 300 a month your pay ment could pay in the 1st month 50 of what you borrowed and 250 off the intrest the next month could be 75 of the money you borrowed and 225 of the intrest so if you took your loan over 5 years and have had it 2 years you may fined you have already payed 3 1/2 years of intrest so if you move it you lose 1 /12 years of intrest that you would then have to pay on the new loan.
to also say i worked for a bank and one of the many things i did there was take calls from customers that wanted to consolidate the debts i would go through all there debts and work out what were good ways of them doing that. what i mean by that is it may be worth you calling your bank and asking them to help talk you through it they can take all the figgers and tell you if it is saving you any money of not and if your payment could be lower or not.
2006-08-03 07:26:27 · answer #1 · answered by jetshadow25 3 · 0⤊ 0⤋
If you are refinancing a mortgage to pay off debt, then consolidation can help in several ways:
1. You will more than likely be paying less interest.
2. The type of debt on your credit report changes and this may improve your credit score.
3. It organizes your debt into one payment.
Debt consolidation does not always work if you tend to live beyond your means and you have no plan for the money you'll be saving every month.
Hope this helps!
2006-08-03 16:09:28 · answer #2 · answered by amkornele 3 · 0⤊ 0⤋
Consolidation is good in a way that you have all of the bills in one place. It's bad because potential creditors see it as a way of giving in. The best way to get rid of debt is to pay off the highest interest loans first, then work your way down to the lowest interest. Of course while doing this your going to be making the minimum payments on the others. So to answer your question absolutley not. Do not consolodate with a company. Do it your self without paying more $$$. If I can't afford it without credit I can't afford it at all. Credit management is 100% self control.
2006-08-03 14:09:40 · answer #3 · answered by Anonymous · 0⤊ 0⤋
There are other alternatives to consolidation. You should try going to a company that does debt settlement instead. They contact your creditors and arrange for you to pay almost half of the debt. They do charge a service fee, but when I did this through Creditsolutions.com, I was completely out of debt in 2 years, and I only paid half of the debt(even with their fee) They were great! Friendly, smart and very helpful! I've heard bad things about consolidation, but had great results with settlement. Good Luck
2006-08-03 16:28:32 · answer #4 · answered by Amanda D 2 · 0⤊ 0⤋
Your supposed to pay less
Ask for a few quotations before choosing your finance company !
2006-08-03 14:09:35 · answer #5 · answered by Anonymous · 0⤊ 0⤋