Loan Consolidation

A loan consolidation is one financial approach to payoff accrued debts with a lower interest rate and with a lower monthly payment. If you are finding it difficult to pay off numerous loans with different companies than a Loan Consolidation may be the right financial move for you. With a Loan Consolidations you combine you numerous loans and consolidate them into one loan.

There are several advantages in obtaining a Loan Consolidation. First, you lower your interest rate on debt. Second, you only make one payment a month that pays on numerous debts. Third, you can lengthen the amount of time to pay on your consolidated loan, which lowers your monthly payments.

As with any financial product there are several disadvantages in obtaining a Loan Consolidation. First, it is best used for multiple large debts. If you have one or two small debts that can be paid off within a year or two, the Loan Consolidation may not be such a good financial decision. Second, you may not be able to consolidate all your loans with one lender. This is due to the fact that a lender is not under any obligation to sell your loan to another lender. Third, it may raise a red flag for some lenders. They may see this as an indication that you're in financial trouble.

There are two major uses for Loan Consolidations. The first use is Student Loans. If you have been in college for several years and have taken out numerous loans to cover tuition and books, the interest rate and the monthly payment can be overwhelming. Consolidating your student loan may be a great way to lower your interest rate and allow you only one monthly payment to one lender. The second use is Credit Card Debt in America. Instead of having to send out four monthly payments to four different lenders on four different dates, you send one payment, to one lender on one date.

Again, with any financial product you must beware of the companies that are out to scam and take advantage of consumers. Shop around, ask questions and make sure you understand the answers. Once you choose a lender check out the company. The best way to do this is getting online and researching the company and not just on their website. The best places are Ripoffreport.com and the Better Business Bureau. When you sign your contract always read the fine print and make sure you know exactly how your payment is being applied to the loans.