People often rush into a debt consolidation plan when they faced a number of debts due to a home loan, personal loan, bills due to a credit card, medical, etc. The central focus of the debt consolidation plan is it lower interest scheme, single payment source and fit in the monthly budget plan. Instead of managing a number of monthly payments, you will now pay one single payment against all your debts.
One thing precisely to be cleared here that debt consolidation loan can only help in lowering or reducing the loan but doesn’t completely finish it off. Some people are actually happy with the debt consolidation loan scheme, and they have been relieved from their debt problem while others find it as a trap, and it often drives people in the debt situation further, and lenders have taken the opportunity as a money extortion situation. Some find it dangerous and opposite of what they think of.
Certainly, when people find themselves in the messy situation of debt, they think of various ways and solution that can drag them out of the mess. No one likes to pay for debt more than their monthly income.
Such people have zero savings in their account and if they have any other financial crisis in their life down the road, they will be having nothing but the debt in their hand. It’s very important that they should realize it before it’s late.
Why sometimes are debt consolidation loans not sanctioned?
It’s not necessary that things will go as per your plans. Sometimes they fall out and often show the result opposite to the expectation. This happens under the circumstances like
- Sometimes it’s the people’s bad luck that won’t help them in driving them out of the debt situation. They may have either bad credit rating, or they don’t have any asset for pounding it as a security to the lenders. Thus, sometimes for some reasonable reasons, people don’t make it and are unable to get a loan.
- Sometimes time got extended longer than what is anticipated. In the starting of the loan, you have often filled out the section for the time period. If you don’t want to pay more payments then you increase the time period. However, once the payment value lowers, the amount of interest rate goes up. If somehow some financial situation occurs, and things get worse then you might miss the payment, and thus your credit score…