Is Debt Consolidation Loans a Good Idea or Maybe Not?

Juggling multiple repayments is definitely arduous while your score is getting down. Credit card bills, outstanding dues set the alarm bells ringing among borrowers, almost pushing them on the verge of an eternal debt cycle.

However, every problem has a solution. If you are managing to handle multiple debts and you are unable to keep up with repayments, you should consolidate your debt. Many lenders provide debt consolidation loans in Ireland, but you should do extensive research to get the consolidated loan at lower interest rates.

Debt consolidation is known as taking out a new loan at lower interest rates that requires one monthly installment used to pay off all debts. With this loan, you do not have to worry about all smaller payments.

Why Should You Consolidate Your Debt?

One of the significant reasons you should consolidate your debt is you do not have to get into hassle of paying multiple installments. You will pay off only one installment toward your loan. This will help you prevent from falling behind repayments.

Repayments are easier to manage because you will pay the loan at much more affordable interest rates. However, note that debt consolidation loan is a kind of refinancing your existing debts. Not all lenders will offer you this deal at a cheaper interest rate.

If you do not get the loan at a lower interest rate, you can opt for debt settlement programmes. Note that they are not a type of a loan or refinancing your existing loan. In fact, you will contact a debt settlement company that will talk to your lenders on behalf of you to accept the payment at lower interest rates.

In this programme, you will not pay dues to your lender or any other financial institution to which you owe the money. Instead, you will pay to the debt settlement company that will put money in savings instead of paying off the amount to your lender. Once all your accounts are in default, the company will force the lender to accept the reduced payment as full and final settlement.

Why Is A Debt Consolidation A Good Idea?

Debt consolidation loans can be benign because:

  • You will not have to pay high interest rates
  • Your monthly repayments will be lower

Debt grows faster because interest keeps accruing on your outstanding amount. With these loans, you have a chance to grow your credit score because you can easily manage your repayment. This may help you save a lot of money in the long run.

When Can Be A Debt Consolidation Plan A Bad Idea?

Whereas the best loans for debt consolidation are believed to be available with a lower interest rate, chances are you end up with getting a deal at a high interest rate. If you fail to pay off repayments of your new loan, your credit score will go down and the lender may issue a CCJ against you.

You will not benefit from consolidated loans if you do not get the offer at a reasonable interest rate. Make sure that you do extensive research before sealing the deal.

The Bottom Line

Before choosing the best debt consolidation loan, you should get quotes from different lenders to compare offers. Do not consolidate your loans unless you are certain that you will pay off your new loan. You must look over your budget before reaching any decision.

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