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Debt Help - Debt Consolidation Loans Versus Credit Counseling

Debt consolidation loans are a do-it-yourself process, whereas credit counseling helps you to make financial decisions. If you already have a financial plan, then you probably don’t need the services of a credit counselor. However, if you have questions or need help with a budget, a credit counselor can offer valuable help.

What Debt Consolidation Loans Can Do For You

Debt consolidation loans can reduce the interest rate you are paying on unsecured debt, like credit cards, and lower your monthly payments. You can choose to use an equity loan with its tax deductible interest or a personal loan. Many lenders offer competitive rates, which you can find by researching companies online.

A loan gives you more control over interest rates and payment schedules than with other options. Not only can you get low rates, but you can decide to take longer than five years to pay back your principal. By taking longer, your payments are lower, giving you financial breathing room.

However, a debt consolidation loan should be part of a larger financial plan that includes budget planning and long term financial goals. If you don’t have these things in place, you may find yourself in deeper financial trouble by taking out a loan.

What Credit Counseling Can Do For You

Credit counseling provides confidential financial planning for a low fee. In a non-judgmental atmosphere, a credit counselor can help you define your financial goals and plot a course to get there. They may suggest a debt consolidation loan, debt consolidation program, or other financial options. They will educate you about the pros and cons of each to help you make a decision.

Credit counselors are familiar with all types of financial programs, so they may point you to little known sources for help. They may also help you realize immediate savings by helping you to reduce expenses or lower interest rates on some of your bills.

Credit counseling is really an investment in your financial future. You get a quick crash course on your finances with practical answers. By getting expert help, you can save your credit, saving you thousands.

To view our list of recommended debt consolidation companies online, visit
this page: Recommended Sources for Debt Consolidation Online.

Carrie Reeder is the owner of ABC Loan
Guide, an informational website about various types of loans.

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Debt Consolidation Loans - Why you Must Consider Debt Consolidation Loans

When you are swimming in a sea of debt, debt consolidation loans can come to your rescue. If you are maxed out on all your credit cards and store cards and are at the brink of bankruptcy, debt consolidation loan is what can save you. Debt consolidation loans are regarded to be a better option compared to any other lines of credit.

Here are some of the advantages of debt consolidation loans

A> Single payment to make: Yes, you heard it right. Rather than pay out multiple payments to many lenders, the debt consolidation loan is the only single loan payment you need to make each month. This can simplify your finances.

B> Interest rates - Most of the debt consolidation loans are loans against your home equity and the interest rates are way lower compared to credit card or personal loans.

C> Monthly payments - When the interest rates go low, so do your monthly obligations. Most consumers notice at least a couple of hundred dollar difference in their payments.

D> Single creditor - You now have only a single creditor to deal with. When you have a problem, you can pick up the phone and talk to that single person rather than having to contact various lenders. It frees up your time.

E> Tax deductions - The interest you pay on your debt consolidation loan can be taken as a deduction on your tax forms submitted to the tax man.

Debt consolidation loans have several advantages. However, they do have disadvantages as well. Hop over to our website, Ameri debt counseling to learn more about the disadvantages and little known secrets of debt consolidation loans. Visit us at http://www.americreditservices.com/

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What Does Debt Consolidation Mean

If you ever surf the internet, watch television, or listen to the radio, then you most likely have heard several advertisements for “debt consolidation.” However, the advertisements are often vague on what exactly this term mean. To make matters worse, the term “debt consolidation” can mean several different things.

One of the most common forms of debt consolidation is a debt management plan, or DMP, also known as credit counseling. With this form of consolidation, there is no loan involved. You make one monthly payment to the consolidation agency, and they pass it on to each of your creditors. In return, you should receive lower interest and waived late and over the limit fees. Your account can be brought up to date, and you can pay it off much faster than you could on your own. The major drawback to this form of consolidation is that you must close your accounts.

Another common form of consolidation is a loan. A loan can be a home equity loan, which is secured by your house. You have to own a home (and have equity in it), and you have to have decent credit to qualify. While a home equity loan can substantially reduce your monthly payment (and may lower your interest rate as well), the major drawbacks are that it is harder to qualify for, and that you are now risking your home to pay off what used to be unsecured debt. Many banks and credit card companies also offer unsecured loans to consolidate debt. These loans generally still have high interest rates and, again, you usually need good credit to qualify.

Other services are advertised as forms of debt consolidation, but do not consolidate your debt at all. Debt settlement is one example of this. With debt settlement, you generally pay a company monthly, but they do not pay your bills at all. Instead, the settlement company holds on to your money until you have enough saved up to settle your debts. This can be disastrous for your credit, and there is no guarantee that you will be able to settle all of your debts. You will also be charged a hefty fee.

Another deceptive form of advertising that is common today is coming from bankruptcy attorneys advertising as debt consolidation. While bankruptcy may be able to wipe out some of your debt, it should only be used as a last resort, after all other options have been exhausted. Bankruptcy has far reaching negative consequences, and will stay on your credit report for up to 10 years.

Due to the many options available, it is very important to research each option and decide what is best for you. Most importantly, be sure to thoroughly check out any company that you are considering working with to consolidate your debt.

D Johnson is a financial counselor for Personal Financial Network, Inc. You can learn more about debt consolidation at http://www.pfni.net

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