What are the Disadvantages of Debt Consolidation?

[Suba]

Although it seems that combining several debts into one debt is simple and will reduce interest, behind it are also hidden disadvantages such as "
Borrowers are not aware of additional costs such as administration fees, transfer fees to pay off several debts which may be greater than the interest that can be saved.
If the borrower uses collateral when taking a consolidation loan, there is a possibility that the collateral will be lost if the borrower fails to pay off the debt on time.

 

[Augusta]

Yes you are right even with consolidation loan, you might need to present a collateral when taking a consolidation loan, there is a possibility that the collateral will be lost if one fails to pay off the debt on time. so it is still a risky venture

 

[Stardom22]

For me l hate loans and debts of any kinds. If at all l should be taking some loans, then l should be having a definite plan for repayment of the loan

 

[Suba]

For me l hate loans and debts of any kinds. If at all l should be taking some loans, then l should be having a definite plan for repayment of the loan

This is just a theory and discussion bro, no need to apply it to yourself but in general. Like debt consolidation seems to make debt installments lighter but if wasteful habits are not reduced then they will be trapped in a spiral of debt that is increasingly piling up.

 

[SilverLance]

It’s true that debt consolidation come with various fees. Borrowers should carefully review the terms and conditions of any consolidation offer so that the costs do not outweigh the benefits of lower interest rates.

 

[Augusta]

The thing is that you are still a debtor as you are using one loan to pay for another