Advantages and disadvantages of consolidating debt

Once in place, a debt consolidation plan will stop the collection agencies from calling (assuming the loans they're calling about have been paid off). The Internal Revenue Service (IRS) does not allow you to deduct interest on any unsecured debt consolidation loans.If your consolidation loan is secured with an asset, however, you may qualify for a tax deduction.

If the same individual were to consolidate those credit cards into a lower-interest loan at an 11% annual rate compounded monthly, he or she would need to pay 2.16 a month for 24 months to bring the balance to zero.

If you were to pay off each credit card separately, you would be spending 0 per month for 28 months and you would end up paying a total of around ,441.73 in interest.

However, if you transfer the balances of those three cards into one consolidated loan at a more reasonable 12% interest rate and you continue to repay the loan with the same 0 a month, you'll pay roughly one-third of the interest (

If the same individual were to consolidate those credit cards into a lower-interest loan at an 11% annual rate compounded monthly, he or she would need to pay $932.16 a month for 24 months to bring the balance to zero.

If you were to pay off each credit card separately, you would be spending $750 per month for 28 months and you would end up paying a total of around $5,441.73 in interest.

However, if you transfer the balances of those three cards into one consolidated loan at a more reasonable 12% interest rate and you continue to repay the loan with the same $750 a month, you'll pay roughly one-third of the interest ($1,820.22), and you will be able to retire your loan five months earlier.

This amounts to a total savings of $7,371.52 ($3,750 for payments and $3,621.52 in interest).

Of course, borrowers must have the income and credit worthiness necessary to allow a new lender to offer them at a lower rate.

||

If the same individual were to consolidate those credit cards into a lower-interest loan at an 11% annual rate compounded monthly, he or she would need to pay $932.16 a month for 24 months to bring the balance to zero.If you were to pay off each credit card separately, you would be spending $750 per month for 28 months and you would end up paying a total of around $5,441.73 in interest.However, if you transfer the balances of those three cards into one consolidated loan at a more reasonable 12% interest rate and you continue to repay the loan with the same $750 a month, you'll pay roughly one-third of the interest ($1,820.22), and you will be able to retire your loan five months earlier.This amounts to a total savings of $7,371.52 ($3,750 for payments and $3,621.52 in interest).Of course, borrowers must have the income and credit worthiness necessary to allow a new lender to offer them at a lower rate.

,820.22), and you will be able to retire your loan five months earlier.

This amounts to a total savings of ,371.52 (,750 for payments and ,621.52 in interest).

Of course, borrowers must have the income and credit worthiness necessary to allow a new lender to offer them at a lower rate.

Search for advantages and disadvantages of consolidating debt:

advantages and disadvantages of consolidating debt-73advantages and disadvantages of consolidating debt-73

Leave a Reply

Your email address will not be published. Required fields are marked *

One thought on “advantages and disadvantages of consolidating debt”