I do have a substantial amount of money in “debt”. Granted, with savings equalling almost all that I owe, it’s not a “huge deal”. However, I got an offer for a loan to pay off all my bills. While the payments would go on longer, it would make all my debt into one payment. It’s a Bank of America loan. Is this the same thing as “debt colnsolidation”? If so, should I just tuck tail and run?
6 responses so far ↓
1 peilthetraveler
Ask yourself what the advantage is for taking that loan to pay off your bills? Probably none. I get these offers to give me a loan every few months. Usually it says something like I can pick from borrowing 10k, 15k, or 25k or something like that and i get to pick my payment over 3 years 5 years or 7 years or something. The interest rate is always higher than my other bills so i never get it. (I think they usually want like 13% interest and my other bills are under 8%)
2 north o
I think, many times, these types of loans make good sense. The interest paid, even though it may be over a long period of time, is often far less than the interest charged on some debts - especially credit cards. One thing to look for, is the ability for you to pay the loan out early and what charges might apply.
3 mirmade13
Actually, if you go through a non-profit organization such as Consumer Credit Counceling, that is one thing they recommend you do…get a loan to pay off all the debt and then make one payment to the loan. It really is a good idea. I took out a personal loan and then used it on my debt, it was the only thing that made it possible for me to keep up good credit and not have to file bankruptcy…which you really do not wanna do.
4 JB
If I were in your shoes, I’d use the savings to be debt free while leaving a small emergency fund in place. Then with no bills, I’d use the money that would be going to bills to restock the savings account. It’ll save you a lot in interest and you’ll be debt free and your credit doesn’t get hit.
5 CHARLES R
I took a debt consolidation loan. Its not a bad thing. I was able to reduce my monthly payments, and I actually had cash flow.
In my case, I was putting aside all of my surplusses and making occasional extra payments on my loan. I managed to pay off a 5yr loan in 2.5 years.
6 Blondie
You should run–run far away…lol. A consolidation loan just moves money around. You should look into a debt management program–lowered my interest and payments and consolidated it into 1 payment. My counsin did a consolidation loan through bank of america a few months after i started my program–i am done with mine. She is still working on it and since she didnt close out her accounts, she wound up using her cards and now not only is paying on the loan but also has to pay the cards again! its crazy!
Check out the company i went with–the call did not cost anything and the counselor i spoke with was great!
here is the website: