Before you agree to a consolidation loan, make sure it’s the right option for you. Otherwise, you may end up in a worse situation than before.
As with any financial decision, you should consider the worst-case scenario. The possible dangers of debt consolidation could prove disastrous. For many, a debt consolidation loan should be the last course of action.
You should look elsewhere if:
- the loan amount would not cover all your existing debts
- your current debts are close to settlement
- the fees for taking out the loan are so high that they outweigh the benefit of taking out a new loan
- the fees for paying off your existing loans early are so high they outweigh the benefits of taking out a new loan
- you can't afford to keep up the monthly repayments for the length of the loan
In the end, the final decision is yours. You need to weigh up the benefits against the risks.