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I'm sure you've seen the advertisements of smiling people who have chosen to take a consolidation loan. But are debt consolidation loans a good deal? Debt Consolidation Through Unsecured Loans While unsecured personal debt consolidation loans used to be quite common, they are less likely to be available to people who need them today. If the bank’s terms are not to your liking, there’s no reason to have its inquiry show on your credit report. The Psychological Pros and Cons of Debt Consolidation While the benefit of consolidating your debts into one loan with one lower monthly payment may provide you with a great deal of emotional and financial relief, it may also leave you feeling prematurely confident about your financial situation. Don’t be fooled into thinking that debt consolidation is right for everybody. It is not a bank advertiser's responsibility to ensure all posts and/or questions are answered. If you go for a variable rate loan, remember that what goes down may well go up, increasing your cost of borrowing. Pros and cons of credit consolidation Consumers with too much debt, particularly revolving debt such as a credit card balance, sometimes consider credit consolidation as the answer to their financial woes.

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You could end up robbing your retirement fund if you rely too much on these loans. And, while the interest rate may be higher than a secured loan, it may be less than is charged on several credit card balances, thereby lowering your interest burden and your payment. If you let the bank take the payments from your account automatically, you may get an even better rate! This makes managing your finances much easier. You can refinance your house, take out a second mortgage, or get a home equity line of credit. Consolidation does not require consultation with your current creditors, making it more likely to be accomplished on your terms. You can often get a personal loan in one day. You’re putting your home on the line, which is extremely risky unless you are certain you can trust yourself to stop overspending and to faithfully pay off the home loans. Debt consolidation may leave you in debt for a longer period.