Loan debt consolidation is something that many people consider but is generally not a good idea. With loan debt consolidation you need to be very careful. Many people look at loans as a simple way to get money. While this method is quite simple for getting the cash you need in short order, it is not a long term financial option because the interest rates are so high. If you are considering loan debt consolidation you should do the math and think again.
Loans Won’t Help with Debt Consolidation
Need to consolidate your debt and looking at loans to help? If so, this probably isn’t a great idea whatsoever. While you may want to get rid of personal debts or credit card debts chances are those debts have much more affordable interest rates than loans do. loans often have annual percentage rate that is in the triple digits. What this means is that even if you have a credit card with a 23% APR you are doing better with that than you would with a loan that has a 500% APR, unless you plan on paying off the balance of the loan within the next one to two weeks.
loans are not meant to meet your long term financial needs, instead they are meant to help with short term financial needs. Most people find that loans help with things such as car repair bills, health related bills, unexpected increases in normal bills, or a paycheck that was shorted. These are all things that you can get the cash for now and then work into your budget when you get paid in several days. loans are only meant to be taken out for seven to 14 days.
It’s true that loans are easy to get and that you don’t have to have good credit to get them, but this doesn’t mean that it is wise to use them to consolidate your other debts. Instead of using these loans to consolidate your debts, put the extra money that you would spend on interest for these loans on paying off your current debts. You’ll find that this is much more sensible when you begin to do the math and really look at the numbers that are associated with all types of loans when compared to loans.