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How Do Debt Consolidation Services Work And Do You Need Them?

 

You hear about debt consolidation services all the time. From those that provide concrete offers for limiting your debt and making your finances more manageable, to outlandish claims made about taking away your debts as if by magic, there are plenty of companies out there looking to provide you with debt consolidation solutions, including credit card consolidation solutions.

But how does this debt consolidation process really work, and can these services actually help you eliminate your debts over time?

Explaining The Debt Consolidation Process

The theory behind working with debt consolidation services to diminish your debts has to do with basically taking out a loan to pay for all the loans, credits and other important debts you may have, so that you'll only be left with a single – hopefully low interest – loan that you can pay off at your leisure. Read more here - http://www.toptenreviews.com/money/debt/best-debt-consolidation-companies/.

Now if done right, this can have many potential advantages:

  • You no longer have to deal with phone calls from various services and lenders asking you to pay up or threatening lawsuit;
  • In some cases, the consolidation loan will only present a single interest rate of 10-15% which could actually save you money when compared to some of your other loans which may have rates reaching upward of 20%.
  • There is no more hassle associated with counting your money at the end of the month and realizing you still have to provide money to three or four different location in a single day;
  • Debt consolidation will also lower your minimum payment – an especially great benefit for anyone who has trouble making their monthly payments as consistent as some lenders would prefer.

 

Tasks Performed By Debt Consolidation Services

The great advantages of using a debt consolidation service is in the convenience of the experience they provide. These services are often friendly and extremely helpful and resourceful. They will sit down and discuss the problem with you, suggesting various consolidation plans – which, depending on your financial situation, may not always involve an actual loan – and helping you to decide the best course of action.

Your relationship with your lenders will also improve. Not only will you not have to deal directly with your lenders, but the service will make sure they don't contact you anymore, and they will make sure the amount of your consolidation loan will be used to tie in any loose ends.

 

Finally, the best debt consolidation services will also make it easy for you to pay the loan back, and provide flexible options, either through lower interest rates or smaller, more manageable monthly payments that you can pay off at your leisure.