Experts in the financial world are cautioning individuals about debt consolidation loan rates. They have made it clear they think the current quick fixes being offered on the market are a symptomatic relief option rather than a credit cure. They are not wrong. When you look at debt consolidation loan rates, which are lower than they have been in a decade, they look tempting.
You have to ask yourself how you got into debt. What were the reasons you are now facing foreclosure, bankruptcy, or just making late payments? If you can understand how you got into debt in the first place you may be able to find a solution that is not dependent on the current debt consolidation loan rates. For instance, are there ways you can cut spending in your home? How often do you eat out? How much do you spend at restaurants versus a week for food? When you compare the numbers you most likely find eating out is expensive. If you can curb your expenses for six months, even one month, you might find where your income is going.
Debt consolidation loan rates are loosely based on the prime rate. Every bank is charged the prime rate for their loan products. To make money they need to add a little something to the prime rate. What they add to this rate is subjective. Debt consolidation loan rates can be as high as a credit card APR. This means it could be 18 to 20 percent on the unsecured debt consolidation loan. Banks are able to examine the risk you pose to them. If you have no collateral they will charge you more for the interest rate.
Also keep in mind one more thing about the debt consolidation loan rates: the advertised rate is not what you are awarded. Instead this interest rate is to get your attention. Once the company has your attention they will take your application and create a package loan for you. This is where you see the interest rate you will actually be awarded. It may be twice or three times the advertised rate.