Debt Consolidation Essay Example | Topics and Well Written Essays - 1000 words

Debt integrating - Essay ExampleAn agreement on collateral against the loan gives a patheticer interest score for the loan, as the risk factor decreases. Naturally, if theres no collateral against the loan, lenders dont have both form of security for their m angiotensin-converting enzymey and they resort to charging a higher interest rate. So if the true conclusion of debt consolidation must be achieved, it is advisable to keep an asset as collateral so the lenders asshole make a forced sale on non-payment of the loan and so that the borrower corporation receive the low interest rate hes looking for.This method has been proven successful when dealing with credit card debt, as credit cards often carry a much larger interest rate than sluice unsecured loans. In an interview, Kerri Cole talked intimately her practical experience in dealing with her debt trouble. She went to Credit Consolidation Services and got her interest payments reduced on all 9 credit cards she owned one of the cards interest rate fell from 27% to 9%. For a small periodical fee, she is saving over $600 a month since she started debt consolidation which makes a rough figure of $7200 saved each year. Though several(prenominal) companies tend to take advantage of these situations and indulge in predatory lending, the particular company Kerri talks about has been refreshingly fair and accommodating to her problem. Predatory lending is a term used for lenders who use unreal methods to convince borrowers to agree to harsh and unfair loan terms, or the systematic violation of the terms by the lenders in such a way that it is very hard for the borrower to defend against it (Predatory lending, par.2). In recent reports, media has increase concerns over debt consolidation. They have pointed out that a large majority looks to reduce their interest rate by converting their unsecured loans into a secured loan. The problem arises at their choice of asset to secure the loan against. Most pe ople tend to secure their loans against their home (Debt consolidation, par.13) which is a dangerous practice putting at risk such a valuable asset would certainly not be the most advisable thing to do. The monthly payment does get lower, but the actual amount repaid over the years is often significantly great in proportion due to the long period of loan. What people argue is that debt consolidation mostly cures the symptoms of the problem and doesnt hit at the root cause of the disease. To owe someone money is always very filtrateful. The stress is compounded when you owe money to not one, but quite a few lenders. Debt consolidation can provide means to develop a workable budget, and it would greatly reduce the stress level by bringing the number of lenders down to one. This would also be beneficial in the sense that one is slight likely to forget a due payment of a single lender than attending to a large number of lenders, each with their own separate terms. Often it happens th at because of a non-payment, you get further fines and charges on late payment a debt of $500 could rise to $700 just because of an imposed fine. Debt consolidation will decrease that amount back to the principle amount (Selman, par.3). So, through debt consolidation we are looking at numerous advantages like no fines or monetary charges, reduced number of lenders, a lower interest rate and no warning calls. Also with your credit rating improving because of debt consolidation, if you are looking for a raw