The benefits of debt consolidation loans are only applicable if you make your full monthly repayments on time. Before you agree to a consolidation loan, make sure it is the right option for you. Otherwise, you may end up in a worse situation than before.
You must consider the worst-case scenario with any financial decision. 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
- If 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 also so high they outweigh the benefits of taking out a new loan
In the end, the final decision is yours. You must weigh up the benefits against the risks.