One of the solutions that is often advertised to help people get out of debt is the use of a debt consolidation loan. The idea behind a debt consolidation loan is that most people who are in financial trouble have several small debts that require monthly payments. These payments combined become large enough that people generally end up paying just the minimums, and never are able to chip away at their borrowed balance. A debt consolidation loan offers some advantages to other debt reduction alternatives, but also has some negative factors to be aware of. Some of the pros and cons include:

Pros of Debt Consolidation

- Payment Advantages and Simplicity: Instead of having several loans outstanding, the debtor has only one loan. This means only one payment, and the minimum payment is generally lower than if you combine the minimum payments on several outstanding debts. This significantly simplifies the borrower’s financial life. Having only one creditor expecting a monthly payment instead of several also simplifies things for the borrower.

- Lower Interest Rates: A Home Equity Loan is generally what is used to consolidate debts - proceeds from a Home Equity Loan are used to pay off all outstanding debts and then a single payment is made monthly to pay down the Home Equity loan. These loans are generally at interest rates tied to either Prime or LIBOR, and are usually much lower than most revolving lines of credit, such as credit cards.

- Tax Advantages: Payments toward home equity loans are usually tax deductible.

Cons of Debt Consolidation

- Temptation: Once your credit cards are paid off through debt consolidation, it’s tempting for many people to start using them again to add to their overall debt balance. Additionally, with a lower overall monthly payment, a borrower might feel like they have more money to spend. Paying off debt requires discipline, and a debt consolidation loan won’t help if the borrower lacks the self control to stop spending.

- Your Home is at risk: If you default on a credit card payment, you’ll pay a late fee and you may hear from a collector. If you default on a home equity loan, you could lose your home, which secures the credit you used to pay off your debt.

- Your debt will last longer: Unless you make more than the minimum payment, home equity loans are often based on a 30 year time frame. You’ll be paying down your debts longer if you only pay the minimum, and in the long run you’ll end up paying more interest overall.

If you do not own a home or you own a home with no equity, there are companies who offer debt consolidation loans. The rates maybe higher than on a typical home equity loan and will vary based on your credit history, but could still make debt problems manageable. While debt consolidation can be effective, it’s not a magic pill. The borrower will need to focus on changing the behavior that created the debt problem in the first place. Overall, however, debt consolidation is a viable option for many indebted people.

Source: Finance

Tags: easy finance, how I can get easy money, accounting jobs, finance portal, finance vacancy, financial jobs, finance jobs, banking jobs, easy finance information, finance world

Now is the time to consolidate student loans. Time is running out for you to get some of the lowest rates available, because on July 1, 2008, the interest rate may jump two percentage points or more.

Waiting until June 30th is not going to help you, the time to act is NOW.

If you are still in school or are within the six-month grace period after your graduation, you are eligible to consolidate at a low rate of 2.875 percent.

This is a last chance opportunity for in-school students to consolidate loans, as the legislation is changing come July 1st.

If you have been out of school for some time, you might be able to consolidate for an interest rate of 3.37 percent, which is not too bad either.

Married couples have been enjoying spousal consolidation student loans. If you are married and have not considered consolidating your loans, you still can until the July 1st deadline.

Some lenders are offering a large carrot, if you agree to let them take your payment via your checking account (direct deposit transaction) on a monthly basis. That carrot could be a discount of up to 1.25 percentage points. The problem is you have to act now. If you are not motivated to move now and wait until June 30th or after the 1st of July, your rates will go up.

How much is up? Well the exact amount will not be known until sometime in June, but if you consider the price of everything else we are currently paying, expect it to be a good-sized jump.

Rumor has it that the in school/grace period rate will jump up to approximately 4.5 percent and the out-of-school rate will be as high as 5.2 percent and possibly higher.

What are you waiting for? Remember the lower rates will be for the life of your loan.

The Department of Education says that it is totally okay for students with loans from financial institutions, who are still in school to consolidate their loans before the July 1st deadline. In order to do that, you will have to ask your financial institution to put your loan into repayment and from there, you can consolidate. Once that is all done, you can then put in a request for an in-school deferment, this way you will not have to start making payments until after graduation.

If you have a direct loan from the Department of Education, you have always had the right to consolidate your loans while in school.

The upside to this is, you will have a much lower interest rate to pay back, and the down side is you will have to start making payments right after graduation, rather than having the six-month grace period.

This situation is good for juniors and seniors, as you have to have at least $7,500 in school loans in order to qualify for this program.

The important thing to do now is to check with your current lenders to see what loan options are available. If you have more than one lender, try shopping around for the best deal possible to consolidate your loans.

After July 1st you will be stuck with your current lender and will not have an opportunity to go to a different lender, unless your current lender does not off a consolidation loan with income sensitive repayment terms.

The time to act is now, and yes, it will take some effort, but the money you will save in the long run is worth the effort.

Remember “a bird in hand is worth two in the bush,” as my grandmother used to say.

Refinancing before July 1st gives you, the student, one last chance to lock in low interest rates and take advantage of other soon-to-be cut money saving opportunities and programs.

Tags: accounting jobs, easy finance, jobs in finance, get finance easy, financial jobs, finance portal, finance jobs, easy finance information, investment banking, banking jobs