If you have realized that you can no longer postpone your debts and avoid your creditors, and you believe that debt consolidation can be a solution for you, it is you right to try it. However, keep in mind that, if you do not play your card right, you could simply fall into another trap, one that will be more difficult, if not impossible to escape.
Here are seven tips you should follow in order to make sure that the consolidation of your debts will be successful!
1. Take all your debts into account before applying! One single debt left uncovered by the debt consolidation loan means unforeseen expenses that could mess up your tightly planned budget.
2. Be realistic when it comes to your income! When you calculate the amount you can afford to pay each month, do not rely on potential salary raises. It is better to be pleasantly surprised than to rely on something that will never happen!
3. Do not borrow more than you need! Especially if you have refrained from enjoying the things you love, when applying for the debt consolidation loan, you will be tempted to borrow more than you really need. Do not do it! More money borrowed means more money to repay and higher monthly rates ( http://www.toptenreviews.com/money/debt/best-debt-consolidation-companies/ )!
4. Do not leave old debts unpaid! The plan is to consolidate all your existing debts under a new one, easier to put up with, not to create more debts!
5. Do not keep the credit cards you repay if you cannot avoid using them! Some will advise you to repay your credit card debt and keep the credit card, to avoid lowering your credit score, but if you know that you will start using them again, don’t do it! It will only bury you back in debts!
6. Do not extend the repayment term more than you have to! You will love the idea of paying lower rates, but you should not add more years than necessary to the repayment term. You never know what the future brings or when the need for a new loan strikes, so it is better to focus on paying back your debts as soon as possible.
7. Do not borrow against your home if you are not sure that you can keep up with the payments! Being in debt is bad enough. Seeing your home foreclosed would be a disaster.
Briefly put, the key to successful debt consolidation loans is to calculate your needs and your income carefully, borrow the exact amount you need and pay it back as soon as possible, with as few risks as possible.