Risks of consolidation loans

Don't be fooled into thinking that debt consolidation loans are an easy way to solve your debt problems. Debt consolidation can be risky path to follow and there are drawbacks to be aware of.

Debt consolidation companies can often not have your best interests at heart. Many will heavily sell additional insurances to accompany the loan. Although you may need protection against critical illness or unemployment, you will be able to get it significantly cheaper elsewhere.

Debt consolidation companies will be keen to give you a large loan because they almost always have your home as security. Even if you default on the loan, they'll get their money back through the forced sale of you house.

Attractive borrowers with excellent credit history will be able to obtain a debt consolidation loan with a low rate of interest. But many consolidation borrowers will not be offered such low rates, and often be faced with very high interests rates.

Simple money advice to help get your finances in order.

money: debt