Before You Take out That Consumer Debt Consolidation Loan

A Credit Article Contributed by Mark Mcclelland

Issues to Consider before Taking out a Consumer Debt Consolidation Loan

If your considering taking out a consumer debt consolidation loan - and consumer debt, in this case, means unsecured debt, like your credit cards, your medical bills, and your personal loans - there are several points you need to address and question you need to answer beforehand:

1. Are there any other alternatives that might provide you more benefit? These might include re-negotiating the terms and conditions imposed on your debts by your current creditors.

2. Can you re-negotiate your current interest rates, or get then changed from variable to fixed.

3. Can you negotiate the overall cost of the loan, including how much interest you'll be charged over the life of the loan?

4. Can you negotiate the monthly payments, and whether or not they include insurance.

5. Can you re-negotiate pre-payment penalties including any that might apply to included insurance payments.

6. If the loan is secured by your home, how much leeway will your lender give you if you miss a payment or are occasionally late with your payments.

These, and other consideration could have a dramatic affect on the benefits you might derive through consolidation of your consumer debts.

So, Should You, or Should You Not, Take out That Consumer Debt Consolidation Loan

You should know that borrowing money in order to consolidate your debts in rarely, if ever, a good option in and of itself. More often than not, you're going to be saddled with an even greater amount of debt when paying off previous loans.

But an argument might just be made for some consolidation options, like those that use a 0% credit card, but only in those cases where you can transfer balances without incurring a fees or transfer charges.

And taking out a second mortgage might provide an avenue out from multiple monthly charges, but it cones at the cost of more interest payments, and another re-payment burden when you sell your house.

The odds are, that for most of you debt problems, a simple and sensible debt repayment plan, worked out with your creditors, will probably offer the best long term solution, even if it doesn't reduce the number of monthly payments you're making.

Where Can You Look for a Consumer Debt Consolidation Loan?

There are actually a lot of organizations, both for-profit and non-profit, that can provide consumers with a lot of information and guidance regarding debt consolidation loans. Since after reading the above, you can see that deciding which option might be best for you is not a simple task, so it's best to avoid those organizations that offer seemingly simple debt consolidation options and plans.

A good filter to use when you start looking for a good consumer debt consolidation organization is to restrict your search to those firms that belong to the Association of Independent Consumer Credit Counseling Agencies and / or the National Foundation for Credit Counseling. The FTC also provides an incredible amount of relevant consumer oriented information on their website.