Debt Consolidation
Debts!
When you have multiple debts then it may be worth considering combining them into one…
Consolidating personal debt into your mortgage is a popular means of lowering the interest rate on your personal debt and combining several different outgoing payments into one…saving you time and money!
As with anything in life, we tend to appreciate things that are easier for us…
How do you debt consolidate?
This is done by refinancing your mortgage to another lender, and also requesting the new lender to pay out your personal debt in the process…
But is debt consolidation really saving you money?
The answer is NO
Well, not all the time anyway…it depends on how you manage your payments!
You see, personal debt has higher interest rates, so consolidating into a mortgage means you have a lower rate overall…right?
yes…BUT
The term of your personal debt is now much much longer. As interest is calculated daily, this means that your personal debt in the long run will cost you MORE in interest if you consolidate it!
This is the case for eg. personal loans or hire purchase loans, but not the case for credit cards as these are ongoing until the card is canceled…
Don’t believe me?
Let’s look at a personal loan balance of $25,000 at 12% over a 10 year term.
Total cost is $18,050 (if rates remain constant).
Let’s take the same loan balance of $25,000 at 7% (consolidated into your mortgage) over a 30 year term.
Total cost of that $25k personal loan is now $34,877 (rates constant)
So what can you do to make debt consolidation worth your while?
if we keep using the above example, what we can do is work out what the repayments would be over a 10 year term but using your interest rate on your mortgage…so in this case 7% and $290pm…
now subtract this from what the original payment would be if you hadn’t consolidated this debt, as above 12% over 10 yrs…$358pm.
The difference (approx $70pm) is what you need to keep paying extra into your mortgage to effectively have paid off the personal loan in the original time-frame but at a lower interest rate…
If you can do this, then debt consolidation is a good way to lower your payments…
With credit cards, consolidation has a greater benefit purely due to the much lower interest rate alone. As credit cards don’t have any ‘end term’ (such as 10 years for a personal loan), then the savings are much more significant!
With any consolidation however, you will be eating into some equity in your property…but saving on monthly cash-flow…
Again, it’s good to have a strategy in place before you buy property!
Debt Consolidation – Is Care One Credit a Fraud?
Care One Credit, is a debt consolidation service that offers second chance help to people in need. Care One Credit offers debt consolidation loans and counseling to those who are drowning in bills and have few avenues to turn to for help.
Is Care One Credit A Scam?
The debt relief industry has many companies and services that advertise various services to help people in need, who have found themselves overwhelmed by their current financial situation. Is Care One Credit another such company that offers much but delivers little when it comes to providing debt relief to those in need?
The truth is, Care One Credit debt consolidation services provides a valuable resource for people, and if used properly can benefit the borrower. They can offer a borrower consolidation loans to pay off their current high interest debt and reduce monthly payments. Sometimes a little breathing room provides all the difference when bill collectors are breathing down your neck.
Debt consolidation companies are not an over night solution. They can instantly reduce your monthly payments in some cases, but you will still carry an outstanding debt that you will need to work to pay off. It will remain up to you to not use your freed up credit lines to simply fall back into greater and deeper debt, worsening your situation beyond what a debt consolidation company can help fix.
Care One settlement plans can help you reduce your debt if consolidation alone will not present a repayment plan that is manageable. You will take a hit to your credit score if you choose to settle your debt with your lenders, having them forgive a portion of what you owe, but sometimes it can help provide the debt relief that can recover your life to balance.
Compare Debt Consolidation Offers Today
Debt consolidation is not for everyone, but for those it can provide relief to, be sure to compare multiple consolidation offers from various company. Care One Credit is just one of the many services, including government non profit debt services, and attorneys that provide consolidation and settlement plans, it is best to get free online quotes for multiple offers and choose the best solution for your current needs.
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