The Law Office of Kim Covington

Call For A Free 1-Hour Consultation
541-393-2790 | 800-673-1891

Please Ask For Kim Directly When Scheduling An Appointment

Pros and cons of debt consolidation loans

Many families in Oregon are looking to debt consolidation loans to manage their consumer debt and make their monthly payments more manageable. According to Debt.org, debt consolidation is the practice of taking out one new loan to pay off existing loans with the goal of lowering the amount due each month. This may help lessen the burden on families each month and allow them to stay current with their debts. However, there are clear pros and cons to consolidation.

 

For some consumers, consolidation loans may be an effective way to get out of debt. Consolidation simplifies the monthly bill-paying process by reducing the number of creditors that need to be paid each month. It may also allow consumers to pay off their debt with a lower interest rate, which could greatly affect the total amount they pay in additional interest and fees.

 

There are clear disadvantages to this method of loan repayment, however. In some circumstances, debtors can find themselves further in debt if they consolidate their loans and do not cease adding to their debts, either through additional loans or the use of new credit cards. Additionally, many of the low interest rates advertised by consolidation companies are actually teaser rates that expire after a certain time period. These loans may also have hidden fees or costs consumers would not have to pay if they continued making individual payments to their original accounts.

 

Many consumers who find success with consolidating their debt do so because of strict planning and a change to their lifestyle. The Consumer Financial Protection Bureau recommends that before choosing to consolidate loans, consumers should resolve to stop adding to their debt and take the time to evaluate all their payments and fees and compare them to what would be required after consolidation. That way they ensure that it is the proper choice for their situation. 

No Comments

Leave a comment
Comment Information
email us for a response

Learn More About Your Fresh Financial Start

Bold labels are required.

Contact Information
disclaimer.

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.

close

Privacy Policy

The Law Office of Kim Covington

Eugene Office
1445 Willamette Street, Suite 9
Eugene, OR 97401

Toll Free: 800-673-1891
Phone: 541-393-2790
Fax: 541-344-6466
Eugene Law Office Map

Albany Office
1135 Dale Street SE, Suite #B
Albany, OR 97321

Toll Free: 800-673-1891
Phone: 541-393-2790
Fax: 541-344-6466
Map & Directions

Roseburg Office
1701 West Harvard, Suite 201
Roseburg, OR 97470

Toll Free: 800-673-1891
Phone: 541-393-2790
Fax: 541-344-6466
Map & Directions

P: 541-393-2790

T: 800-673-1891

F: 541-344-6466