The Update

Questions You Need To Ask About Debt Consolidation Loans

Understanding a debt consolidation loan is really simple. It replaces countless annoying monthly bills that are all due on different days of the month with a single annoying monthly bill. Heavily advertised as the solution to getting your bills paid on time, here’s a candid look at what you need to be aware of before deciding that a consolidation loan is the right solution for you.

Will it Pay Off All Your Debts?

If not, you may be just changing around the amount you owe on some debt without really accomplishing the goal of simplifying your monthly payments.

Will it Take Longer to Pay Off Now?

A lower payment can mean a longer term. That isn’t necessarily a bad thing, but be aware of how long it will take to pay off the loan. Also, check how much you’ll be paying in interest compared to how much interest you’ll be paying if you leave your current debt alone.

Will You Still be Able to Use Your Credit Cards or Other Revolving Debt?

If so, you may find yourself strapped with the original amount you owed on your credit cards within a few months – on top of the debt consolidation loan you took out to resolve the problem.

Are There Fees Involved?

Find out what they are so that you can see if it still makes sense to go ahead with the loan when you take those fees into account.

Will Your Home be Used as Collateral?

Many debt consolidation companies use regular salespeople and them “consultants.” Don’t take advice from these people. Ask questions, do research and find out what the facts are before you sign anything. Using your home as collateral may make it difficult or impossible to refinance or sell your home should the need arise.

Peace of Mind

Consolidating your debts can provide peace of mind. With a clear plan and a manageable payment schedule, you can focus on achieving your financial goals without the burden of overwhelming debt. A Signature Loan from Rio Grande Credit Union is an effective way to regain control over your finances and pave the way for a brighter financial future.