Where can I go to con­sol­i­date my loan?

CityPress - - Busi­ness -

Ts­tati writes:

I am look­ing for a loan to con­sol­i­date my debt. There are sev­eral com­pa­nies I came across with this prod­uct, but I’m not sure how cred­i­ble the ma­jor­ity of them are.

City Press replies:

Debt con­sol­i­da­tion is not nec­es­sar­ily a so­lu­tion to a debt prob­lem. Re­ports from debt coun­sel­lors show that in about 80% of the cases where in­di­vid­u­als have con­sol­i­dated all their debts into one loan, they do not ad­just their life­style or liv­ing ex­penses and end up re­open­ing the credit lines they closed with the con­sol­i­da­tion loan. This just leads to fur­ther in­debt­ed­ness and, ul­ti­mately, le­gal ac­tion or debt re­view.

Be very aware of this risk when you de­cide to con­sol­i­date and make sure you are mak­ing the ad­just­ments to your bud­get so that you do not ac­cess fur­ther credit.

In terms of credit providers, the ma­jor banks of­fer con­sol­i­da­tion loans. If they turn you down due to your credit record, then smaller credit providers who have greater risk tol­er­ance will of­fer a loan, but at a much higher rate and with higher fees. If you do not qual­ify for a bank loan, then you may find the other of­fer­ings too ex­pen­sive to be worth­while.

Also be very wary of loan scams, where con­sol­i­da­tion loans are of­fered but you are re­quired to pay le­gal fees or con­sol­i­da­tion fees up­front. No credit provider will ever ask for up­front pay­ment.

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