Con #1: If you've ever used a consolidate debt calculator on a lender's website, and the results described a payment decrease as a "savings," then the "Con" you need to be most aware of is ... Look, just because combining your debts into a single loan will result in a lower payment, DOES NOT mean you will actually experience a "savings." Why not?
Because if the interest rate is higher and/or the repayment term is longer, you will likely end up paying more in interest charges than if you didn't combine your debts into a single loan.
Debt consolidation is nothing more than a con because you think you're starting with a clean slate.
But the truth is the debt is still there, as are the habits that caused it—you just moved it!
It’s typically considered for people who have high consumer debt.
These three principles are used in refinancing and debt consolidation.You might find yourself in a predicament where no matter how hard you try, you just cannot cut expenses any further or earn more income.The only solution is to lower your monthly debt payments.With interest rates at historical lows, it may make sense to consolidate some of your credit card and other personal debt into a new consolidated loan, typically a home-equity loan.Consolidation loans can significantly reduce your required monthly payment because they are generally amortized over 10 or 15 years.