Debt repayment strategies by consumers often differ and we have seen some who are still sticking to consolidation loans as a way to group all of their debts together and potentially get a more affordable monthly payment, particularly if these individuals qualify for a low rate on a consolidation loan. Personal loans for consumers may currently fall into a wide range as, once again, the credit score of a borrower will heavily depend on what rate they receive, if they can borrow a loan at all, as there are consumers currently looking for assistance with consolidating debt when a bad credit score is in place.
However, some consumers may get a rate of anywhere from 12% or 14% to as high as 25% to 26%, but again the lender, consumer’s financial position, and sometimes even collateral that can be offered will factor into what rate a consumer will get on one of these consolidation loans. When personal loans that are used to consolidate debt, consumers find themselves in a situation where they may be able to afford a consolidated monthly payment on their debts where previously they could make minimum payments on the total amount they owed on debts that may range from other loans, credit cards, or other financial obligations.
Sadly though, we saw reports here at the beginning of October that indicated delinquencies in the area of personal loans did increase and, as a result of this increase in personal loan delinquencies for borrowers, there are some who are questioning whether they can acquire a debt consolidation loan and avoid missed payments as a result. While there are countless online calculators that can be helpful when consumers need help looking at what their monthly payment costs may be when consolidating, consumers do need to make sure that they have set in place strict financial habits that will allow them to budget wisely, meet this consolidation loan payment, and it goes without saying that consumers will have to avoid spending during this time, which again will take a great deal of financial discipline for some.
Arguments continue to come from some financial advisers that consolidation loans are going to be detrimental to the consumer’s debt relief and goals, and as this is a higher principle amount associated with what may be a higher interest rate, consumers could find that a longer repayment timeframe and interest rate payments combined could lead to higher overall costs on a consolidation loan despite the fact that they are making more affordable minimum monthly payments. However, consumers do have opportunities when it comes to not only exploring help for their financial life in general but what amounts of debt relief may be beneficial for their situation.
A nonprofit credit counseling agency or even a lender, like a bank or credit card company, might be able to either provide the resources a consumer needs or point them in the right direction when it comes to getting help for meeting payment costs on their debts, so if a consumer is considering a debt consolidation loan, there are those who have used them to their advantage as of late, but as we are seeing delinquencies rise on personal loans, some of which may have been used for debt consolidation, consumers do need to take action quickly, explore all their options, and make sure that they have the financial practices in place that will allow them to combat their debt in an efficient manner.