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After
debt reaches epidemic proportions, the marketing whizzes focus
on how to consolidate debt. The TV, radio, web sites, magazines,
and newspapers call carry advice on solving debt and how debt
consolidation can be the answer to your prayers.
An
average US family has at least four credit cards with all the
available credit used up, a home loan, car loan, education loan
and a consumer loan. Soon the payments owed every month are
higher than the income. The world in reality is not all sunshine
and debt has its ups and downs.
Here are a few important pluses
and minuses of debt consolidation:
* Pluses:
a. You club all loans into a
single one and work out a feasible EMI and interest rate.
b. Most consolidation loans
carry a much lower interest rate in comparison to other credit
card or consumer loans. The most popular being the home equity
loan.
c. Consolidation means a lower
monthly payment to be made over a longer period. It is important
to try and pay back not the minimal EMI but the largest
possible.
d. Many home equity loans come
with a tax breaks which in the long run is a saving.
e. Instead of juggling many
payments at different interest rates you need to only provide
for the steady repayment of a single consolidated loan. And
there are no tensions of delayed payments, wrong amounts paid or
forgotten payments. |