Do you ever wish you could take a magic wand and make all your bills and bad credit loans disappear? Well as fantastic as that sounds there are only three ways to do that. The first is to die, which is not a viable option, especially since some debts could transfer to a loved one. The second is to change your name and go live in the hills, possible for some but not for most. The last and most sensible option is a debt consolidation loan.
These loans combine all of your unsecured debt into one loan. So basically, it is a new loan that pays all your bills in one lump sum. Then you will pay that sum back with a more favorable interest rate. It is much simpler at the end of the month because you are only paying one bill instead of six, seven, or more.
Did it solve the problem? Well, that depends on what you intend to accomplish with a debt consolidated loan. If it is your intention to consolidate a group of similar bills into one to get rid of them once and for all, then these loans would work great for you. However, if your intention is to magically wipe away one set of bills to be replaced by another, then you are basically putting a bandage on a broken leg. Let’s explore all we can regarding options so you will have the best information to proceed.
The best cure for a broken arm or leg is set the limp straight so it can be mend over time. If this is not done correctly the limb will be very painful and will never set right. interestingly enough your financial situation is very similar. For example, let’s say you have $15000 in bills and you are paying high interest on some but not all. It is also hard to keep the payments on-time because you might forget a few each month. You get a loan that pays all those bills off and now you have one with a much lower interest rate. So each month it is easy to remember to pay it and make that on-time payment.
In actuality you have not gotten rid of your bills, you have lumped or transferred them into one. The danger is that most people get the idea the bills have disappeared and then start to make more bills. In a year or more they have the same problem or worse all over again. So the behavior that created the bills is still there. This is what keeps the debt consolidation loan companies in business, repeat customers. The real solution is not stopping the bills but corralling the problem that created the bills.