Debt Consolidation - The Benefits and Down Falls
4969
Finance > Debt Consolidation
Mar 1, 2007
Jason P Bertrand
Debt Consolidation - The Benefits and Down Falls
Copyright 2006 Jason P Bertrand
A debt consolidation loan is used to take all of the separate debt a person may have and combine that debt into one, lower combined payment. A debt consolidation loan will generally be used to reduce debt to a more manageable level. The new payment will be lower than the sum of the previous payments and is also tax deductible where those previous balances may not have been.
For example if a person had three credit cards with balances of $2000 each and monthly payments totaling $200, a car payment with a balance of $18000 and a payment of $450 and a second mortgage with a balance of $32000 and a payment of $550. That person could combine the total debt of $56000 and turn that into a payment of $469 for 20 years at 8%. This would show a monthly savings of $731 on a monthly basis. In addition the interest paid would be tax deductible for even more savings.
Debt consolidation is very popular as people tend to over extend. Last year the average amount of credit card debt held by Americans was over $8000. In addition the interest rate on a debt consolidation loan will usually be much less than that on those debts that are being paid off.
Many different items can be paid off by a debt consolidation loan: Credit cards, auto loans, other mortgage loans, furniture financing, student loan and other personal loans. The list is endless. The beneficial part of the equation is that combined sum of payments will be much more manageable.
A debt consolidation loan also gives a home owner a ?fresh start.? As bills add up, it becomes difficult to manage all the different debts at the same time. It is easy to write one check at the end of the month, and much more difficult to write 30 checks. By consolidating, it reduces the chance of delinquent payments, and allows a better scope of cash flow.
The biggest negative of debt consolidation is the opening up of the previous debt. Many consumers consolidate their debt and then use their now available credit for more purchases. This new debt, in addition to the debt consolidated, becomes too much to bear. One must be careful when consolidating, and make a personal pledge, not to obtain new debt once the consolidation loan is in place.
The moral to this story, is that debt consolidation can reap amazing benefits when utilized properly. When utilized to add additional debt load, it can be very detrimental.
A debt consolidation loan is used to take all of the separate debt a person may have and combine that debt into one, lower combined payment. A debt consolidation loan will generally be used to reduce debt to a more manageable level. The new payment will be lower than the sum of the previous payments and is also tax deductible where those previous balances may not have been.
For example if a person had three credit cards with balances of $2000 each and monthly payments totaling $200, a car payment with a balance of $18000 and a payment of $450 and a second mortgage with a balance of $32000 and a payment of $550. That person could combine the total debt of $56000 and turn that into a payment of $469 for 20 years at 8%. This would show a monthly savings of $731 on a monthly basis. In addition the interest paid would be tax deductible for even more savings.
Debt consolidation is very popular as people tend to over extend. Last year the average amount of credit card debt held by Americans was over $8000. In addition the interest rate on a debt consolidation loan will usually be much less than that on those debts that are being paid off.
Many different items can be paid off by a debt consolidation loan: Credit cards, auto loans, other mortgage loans, furniture financing, student loan and other personal loans. The list is endless. The beneficial part of the equation is that combined sum of payments will be much more manageable.
A debt consolidation loan also gives a home owner a ?fresh start.? As bills add up, it becomes difficult to manage all the different debts at the same time. It is easy to write one check at the end of the month, and much more difficult to write 30 checks. By consolidating, it reduces the chance of delinquent payments, and allows a better scope of cash flow.
The biggest negative of debt consolidation is the opening up of the previous debt. Many consumers consolidate their debt and then use their now available credit for more purchases. This new debt, in addition to the debt consolidated, becomes too much to bear. One must be careful when consolidating, and make a personal pledge, not to obtain new debt once the consolidation loan is in place.
The moral to this story, is that debt consolidation can reap amazing benefits when utilized properly. When utilized to add additional debt load, it can be very detrimental.
Article Source: http://www.articlerich.com
Jason Bertrand is the President of JPB Financial Services, Inc., a Connecticut Corporation and member of the Better Business Bureau. He has over a decade of experience in the financial services industry and is a Notary Public in the State of Connecticut. Please visit the following sites: www.emortgageloanstore.com www.businessloansandleasing.com www.jpbfin.com Feel free to contact Mr. Bertrand with any questions or concerns through jbertrand@emortgageloanstore.com, or mail to: JPB Financial Services, Inc Attn: Jason P Bertrand PO Box 552 Vernon, CT 06066 860-982-533
Write a Review
Add to My Favorite
Refer it to Friend
Report Article
Other links owned by this user
Copyright 2006 Json P Bertrnd A debt consolidtion lon is used to tke ll of the seprte debt person my hve nd combine tht debt into one, lower combined pyment. A debt consolidtion lon will generlly be used to reduce debt to
Category:
Copyright 2006 Jason P Bertrand An interest only option mortgage loan is a mortgage that only requires one to pay the interest portion of ones mortgage payment. An interest only option is an attachment to another type of loan. Either a
Category:
It is much better to pay a home mortgage loan and build equity than it is to rent and pay someone else's home mortgage loan for them. By purchasing your own home you are investing in your own future. The possibility of owning ones own home is easily
Category:
Other links at Finance > Debt Consolidation
Bad credit debt consolidation is a mystery for some people. If you have a bad credit history what are the options, and just what exactly are the merits of seeking professional help from a recognised debt consolidation company? This article points them out
Category:
Consumers need to take steps to get to grips with their finances, it has been suggested.
Category:
Debt consolidation counseling is an effective tool that will help you to find the solution to your mounting debt related worries.
Category:
Debt in and of itself is not a bad thing. Debt allows you to do things you otherwise normally could not do, such as start a business, go to college, or pay for a home. Debt constructs buildings and funds investments and entire corporations -- even the gov
Category:
Site Sponsor
Directory Statistics
Articles: 68214
Categories: 501
Yahoo Entertainment
