How to decide if consolidating debt with a personal loan is good or bad
Should I Consolidate Debt with a Personal Loan?
If you’re thinking of using a personal loan to consolidate debt, make sure that you’ll be able to afford the payments and see the loan through to the end. If you think you may need another solution because you won’t get out of the loan, some lenders won’t agree to allow you to use other solutions, such as a debt management program. This video explains how to weigh the pros and cons of this debt relief option.
[On-screen text] Ask the Expert: Pros and Cons of Consolidating Debt with a Personal Loan
Gary Herman, President of Consolidated Credit: Consolidating credit card debt into another loan is risky. If you can get a better interest rate, and I mean a lot lower interest rate, sometimes it is worth borrowing money to pay off your credit cards.
However, most loan companies or finance companies inclined to give what they call debt consolidation loans, don’t participate in debt management programs, which means you’ve got to make this loan work or you may not be able to get the relief of a credit counseling program.
You should compare the benefits of participating in debt management with the benefits of borrowing money to pay off other debts before doing it.
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