Being in debt can take its toll on anyone. When the debt payments start to eat up every available penny in the monthly budget, it becomes terrifying.
In order to help alleviate some of that stress, a debt consolidation loan is probably something you will want to consider.
However, it is important to make sure it will actually help before sending in your application.
The first thing one must do when looking at the benefits of obtaining a debt consolidation loan is to gather all monthly bills that will have an eventual payoff, save the mortgage. This means all loan and credit cards payments can be lumped into one big pile.
Once you have them organized, it is time to do some investigating.
Add up all of your monthly payments to get a grand total of how much money is going out the door in order to pay your credit bills.
Once you have that number, take a look at your statements to see how much of that money is actually being applied to the principal of the account.
In cases where only the minimum payment is being made, it is not uncommon for only 50 to 60 percent of the money being paid out to go to actual balance of the bill.
Now compare that number to what would happen if you were to secure a debt consolidation loan. Since the interest rates on debt consolidation loans are generally lower than credit cards, especially for those with bad credit, the ratio of money to interest versus the principle should be significantly less.
In other words, more of your money is going to paying off the actual debt instead of paying interest.
In addition to this benefit, you will now also have the luxury of making only one payment each month. Because it can get overwhelming to keep track of multiple accounts, this helps keep most people organized and helps them to not miss any payments.
Because all of the payments are now consolidated, you may actually find that the monthly payment is significantly less. For the consumer, this means they get out of debt quicker and it costs them less money!