Nowadays, more and more people choose debt consolidation in order to manage and consolidate outstanding debt. However, does this option really help you save money or not? And furthermore, will debt consolidation cost you money? If so, how much? We’ll answer each of these questions in the following paragraphs.
What Fees Are Associated with Debt Consolidation Programs?
First of all, it is important to note that all reputable debt consolidation companies will offer a free no-risk consultation and charge no upfront fees.
However, even if you don’t have to pay any upfront fees, there are some costs that come with the territory and debt consolidation companies will charge specific fees. This fee usually represents 20-50 percent of the final settlement. To that end, if the final settlement is of $5,000, then, you will owe a sum of roughly $1,000 in fees.
While it’s true that this sum of money will be added to the total amount of money you owe, over the course of time, it can greatly help diminish your overall debt. Thus, the overall cost of debt consolidation is very often financially beneficial in the long run.
To that end, it’s worth outlining that you should compare the size of the additional fees before picking out a program. This way, you’ll pick the most convenient option for you.
Compatible with Unsecured Loans Only
Moving on, bear in mind that, in most cases, you have the option of consolidating your debt with unsecured loans only. That is to say, you can consolidate the loans that don’t imply an asset as collateral, such as personal loans, credit cards, student loans, and so on. Therefore, make sure you consider this, as this type of loan isn’t likely to work with auto or home loans.
Making Debt More Manageable
The main reason people choose debt consolidation loans is to make it easier to cope with their debt. Dealing with multiple payments on a monthly basis can be stressful and overwhelming, making you feel anxious. Such a loan could put an end to this problem, allowing you to enjoy peace of mind when it comes to debt.
So, is a debt consolidation program the right option for you or not? You alone can make this decision based on what you’ve read so far. In short, even if you might need to pay some fees, it is very likely worth it in the long run.