Debt consolidation is not the same as debt settlement.
In debt consolidation, you pay your debt in full with no negative consequences to your credit.
Cape Town - Over-indebted consumers have various options to choose from to help them on their road to financial freedom, one of which is debt consolidation.
In a nutshell, debt consolidation involves taking out one single loan to settle all your other loans.
Since you will only have one payment and one interest rate that is lower, your monthly payout is going to be much less. The potential for more debt if you are not careful.
Since you will be freeing up money, you will have more to spend.
When you lump together your debt you are only going to pay interest on one loan and often times receive a lower rate.
In turn, you will be able to save yourself a lot of money right off the bat.3. If you have been struggling to pay your debt, month after month, you are probably interested in lowering your payments no matter what it takes.
In fact, since you have reduced your interest payments, it is possible that your credit rating will actually improve as a result of your new debt consolidation loan. Remember, however, that you have other options as well, such as credit counseling, a consumer proposal, or bankruptcy, so we suggest you review all of your options and then decide which option is right for you.The theory is that one payment will be easier to manage.The goal is to lower the interest rate and the monthly payment while paying off your debt more quickly.Whether you are teetering on the edge of bankruptcy or just trying to better manage your finances, you can’t help but notice all the advertisements touting debt consolidation. Read on to learn about the different debt consolidation options and the pros and cons of each.(To learn about other ways to handle debt, see our Debt Management topic area.) With debt consolidation, you get a single loan to pay off all of your smaller loans, thereby leaving you with just one monthly payment rather than several.While you may think that this is the right move for you, once you realize the potential drawbacks you may change your position.