Management vs. Debt Negotiations
A debt consolidation loan is simply a loan that pays off your other loans. Once you consolidate a loan, you owe that money to the new lender, not to the original creditor. A debt management program reduces your monthly debt payments by acting as a middle path between and your creditors and tries to come up with a reduction in the interest rates or fees on your loans. Debt negotiation is the act of settling a debt for less than what you owe. You pay a part of what you owe to a creditor, and the creditor writes off the rest of the debt.
Is debt consolidation a shortcut to financial carefree life?
A debt consolidation loan can work in your favor provided you do your homework. Don’t rush into any consolidation loan just because you have too many debts. There are secured debt consolidation loans and unsecured ones. A secured consolidation loan is a secure line of credit loan providing a low rate of interest. But this does not make a difference as it covers many hidden costs and fees. In contrast an unsecured consolidation loan does not provide the loan for a mortgage or a home equity original loan. But it is a safe option. You can go in for this type of loan if you have a decent credit card report. So, choose wisely!
Short cut or Long cut? Which one is better?
A debt consolidation will offer you an easy shortcut method to wipe off all debts in a single sweep. But it does not teach you the value of living wisely. Debt consolidation simply can be seen as a propeller to spending more what you have. Social psychologists feel that it is better to endure the painful lesson of humiliation. It is better to live a happy and financially carefree life forever.
Debt reduction strategies
Invest and choose wisely now to be happy and debt free later – even if you run up a debt, always aim to pay off the debt as fast as possible. Reduce your monthly spending -- use the consolidation loan to pay off priority debts as fast as possible. These include debts taken to cover phone, electricity bills.
Debt consolidation – secure your future
Use your debt consolidation loan as an avenue to wise up and spend your monthly income properly. Consult a dent consolidation loan counselor and make a plan to pay all your debts and even your debt consolidation loan quickly.
There are many lenders and financial institutions in the market which offer these loans. But do not go in for advertising gimmicks. It’s better to be safe