Do bill conslidations loans actually work?
billscott92787 asked:
Do they actually give you lower payments? Are they easy to secure financing if you are consolidating many items like credits card and an auto loan?
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Do they actually give you lower payments? Are they easy to secure financing if you are consolidating many items like credits card and an auto loan?
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I assume that you mean debt consolidation and not consolidation of student loans. The answer above is for student loans. Debt consolidation can work. It is up to you. If you consolidate your debt and then just run up more debt you can quickly get yourself into worse shape than you were in before.
The simple solution is to close the accounts that you have consolidated, but this could hurt your credit score in three ways.
1) Closing accounts lowers the available amount of credit you have. This affects your debt utilization.
2) Closing your accounts could lead you to shorten your length of credit history.
3) Closing or opening too many accounts in a short period of time shows too much credit activity.
So if you can be disciplined about it, yes debt consolidation could work.
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Your question is a prime example of why algebra was important in high school. There are many variables to your formula. If your auto loan interest rate is less than the consolidation loan rate, don’t bundle them together. It’s easy to get a consolidation loan if you have a decent credit score but difficult if you don’t as with any kind of loan. Make sure you clip your credit cards after you’ve paid them or you’ll be doubling the amount of your debt. If you go with consolidation, you need to agree to the terms of the loan and honor them. You’ll be debt free in 2, 3, 4 or whenever years instead of struggling with paying interest on interest on interest. Talk to a financial institution and have a list of all your debts ready with addresses.