Do you Lose Money by Consolidating Personal Loans?

Sometimes, people lose money by consolidation personal loans. They don’t see it though due to them getting a lower monthly payment. Yet the number of payments and the rate of interest all have to be considered. Just because you get a lower payment doesn’t mean you save money. Be an advocate for yourself and find out.

Sometimes, consolidating personal loans is a way to free up money for the household budget. You may be paying too much month after month so you always struggle with your finances. If your consolidation rate of interest is much lower than the rate on each of the loans, then you can save plenty of money.

If you do get a lower payment, that doesn’t mean you should go out and accumulate more debt. Put any extra money you can into a savings account. As that savings account grows, use some of the money to pay extra payments on your personal loan that you consolidated. By doing so, you will be able to pay it off much faster. You will also be able to enjoy paying less in overall interest costs.

Another area where you may be losing money due to consolidating personal loans is the fees involved. You want to proceed very cautiously with that. Make sure you calculate that all in. Some lenders are clever as they will add those fees into your loan and they will be part of your payment. Sometimes, you will pay less overall than before but not always. Again, you have to be proactive and find out.

They can be very convincing though to make an offer look good. Remember, a lender isn’t’ giving you money for your own benefit. Instead, they are doing it in order to help them earn as much as they can in the way of overall interest. Don’t be fooled by the cloud of smoke they can toss out there.

To ensure that you don’t lose money by consolidating personal loans, use online calculator tools. By entering each of the loans you have, the monthly payment, the interest rate, and the balance due you can get your answer. You will be able to see if the consolidation terms and conditions help you to save money or if you will pay more.

If you find that you will be losing money by consolidating personal loans, don’t do it. Instead, make a plan to pay off what you owe. Cut out any expenses from your budget that aren’t absolutely necessary. Such sacrifices will be temporary and they will help you to get back on track.

You can also try to get an additional job to pay down your debt. Start with the personal loan that has the highest rate of interest. Allocate as much extra as you can to pay it off. Once that one is done, take the extra money and what you paid per month on it. Allocate that money as extra on the next personal loan with the highest interest until they are all paid off. 

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