Before You Go For a Debt Consolidation Service

I’m pretty sure you’ve heard it a few times before, how being in debt is not a crime, but just how many of us actually take this to heart and leverage on this fact to perhaps try and work our ways out of debt? Many people would much rather continue to bury their heads in the sand and pray that the debt somehow magically goes away. Needless to say, it never does.

For those who do decide to do something about their piling debt levels however, debt consolidation is an option. In fact, consolidating your debt can be a very effective way of slowly chipping away at your overall debt and eventually paying it off, and for those who aren’t too clued up as to exactly what debt consolidation is, it’s simply a service provided by a debt-buyer who then effectively consolidates all your debts into one arrangement where you will pay a new, more affordable repayment with adjusted interest rates.

The idea is to make the repayments more affordable by adjusting the interest rates and effectively ensuring you only have to make one repayment, which means you’d naturally then effectively extend the period over which you pay-off your consolidated debt, but you also save in a number of other ways, like avoiding repeated bank charges and penalty fees for bounced debit orders and the likes.

So generally debt consolidation is a good thing and can really help you climb out of the deepest of debt binds you may find yourself in, for whatever reasons which may have contributed to all your debt.

Before you make use of the services of a debt consolidator however, you perhaps need to consider something. As with any financial service or perhaps any other consultancy based service, debt consolidators are also only in this for the money and so they do indeed levy somewhat of a fee for their services of bundling up your debt and then offering you lower repayments and interest rate terms.

This means that you could perhaps try and go it yourself by way of consolidating your debt in some or other way, but it’s perhaps a bit of an advanced undertaking which may not be all that obvious to you if you’re already drowning in debt. It’s a matter of just seriously crunching some numbers to see if you can’t work your way out of all the debt you have without bringing in a consolidator who will effectively charge you a fee. A simple example of this would be that of perhaps making use of a bad credit car finance provider if you maybe had plans of downgrading your vehicle to one which is more affordable and then using the financing you got from that bad credit service provider to pay off the existing loan on the car you currently have.

It’s really just a matter of zoning in on the technicalities and tiny details and then modelling a solution which you can then use to work your way out of debt. I mean all the tools are readily available, including an interactive car finance calculator which you can use to model the exact figures you’d be working with.

And once you’ve cleared your debt, it’s time to start saving for retirement!

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Alison

Finance Blogger at Payday Jester
I have a passion for all things finance and business so if I can help you in anyway then please get in touch and if you have any comments or feedback please leave a message.

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