When you have outstanding debt, from auto loans to student loans to credit cards, it can be hard to keep up with payments and balances. You may find that debt consolidation can help you streamline your finances, but it’s not going to fix your underlying financial challenges. Therefore, if you are considering debt consolidation, it’s important that you understand the advantages and disadvantages.

If you are in or near Columbia, South Carolina, contact Bob Rankin at Covenant Mortgage Services. He will work with you to help you find the right solution for your goals- whether buying a home, consolidating debt, getting funding for a variety of purposes, and so much more. He can help you determine if it’s time for debt consolidation.

Below, we’ll explain more about what debt consolidation is, as well as the advantages and disadvantages of this financial solution. Finally, we’ll explain how you can decide if this option is right for you.

Debt Consolidation: What is it?

Debt consolidation is a process where you pay off multiple debts with one loan, typically at a lower interest rate. Some lenders offer debt consolidation loans that are specifically for this purpose- but most standard personal loans can be used for this purpose.

Another option is a balance transfer card. For this option, qualified borrowers are typically offered a 0% intro rate for 6 months to 2 years. The borrower chooses the balances they wish to transfer when opening their account or can transfer the balances after the card has been issued.

Advantages of Consolidating Debt

There are several advantages associated with consolidating debt, such as:

  • Streamlined finances
  • Expedites payoffs
  • Lowers interest rates
  • May decrease monthly payments
  • Improves credit score

Disadvantages

While the above advantages may make consolidating debt seem like a desirable solution to your financial woes, it’s important to note that there are some disadvantages associated with it as well:

  • May come with additional costs
  • May increase interest rate if your credit score isn’t high enough
  • May cost more interest over the life of the loan
  • You may miss payments
  • Doesn’t fix any underlying financial issues
  • May encourage increased spending

Should You Consider Debt Consolidation?

Under the right circumstances, debt consolidation can be a solid financial decision- but it may not always be the best one. If the following applies to you, it might be a good idea to consider debt consolidation.

  • You have lots of debt
  • You have other plans to improve your financial health
  • Your credit score is high enough to qualify for a lower rate
  • You have the cash flow needed to cover your debt service

Conclusion

If you are struggling with debt, it might be a good idea to consider debt consolidation- if you meet certain criteria. This can be a great way to get on top of your debt and get it paid down quickly. If you’re in or near Columbia, SC, contact Covenant Mortgage Services to learn more about whether this is a good option for you. Mr. Bob Rankin can help you get your finances in order so that you can meet your financial goals, no matter what those might be.