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The Truth About Debt Consolidation: Exploring Pros And Cons With A Focus On Ascend Finance’s Legitimacy



The Truth About Debt Consolidation: Exploring Pros And Cons With A Focus On Ascend Finance's Legitimacy

All we can see today are the Americans struggling with the repayment of their debts. This has been increasing every year and therefore it is better to consider debt relief as an option. This option is called debt consolidation. 

Debt consolidation is all about taking up a loan and repaying your debt using your existing credit cards. However, this new loan is much better than the older one, as it will allow you to repay your loan much faster and potentially save your money too.

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What are the pros or benefits of using a debt consolidation?

It will totally depend on your financial situation to decide which one of the debt reliefs is better for you. Here are some of the four reasons for the same:

  • Lower interest rate: In a debt consolidation program, you will get a lower interest rate than what you are paying for your current repayment. This will save you a lot of money depending on the length of your repayment. 
  • In this program, all your debts will be combined into one simple payment making it easier for you to track and budget it accordingly. You will never have to face the risk of missing the repayment. 
  • While you are paying through credit cards, there is no timeframe for the repayment. You are just doing it each month which ultimately does little for you to decrease the total balance. On the other hand, the consolidation loan has fixed monthly payments to be done, which will make you aggressively pay down your loan and ultimately get your balance down. 
  • The more you pay out the amount, the better will be your credit score. On the other hand, this will also help your credit by increasing your credit utilization ratio. 

What are the cons of your debt consolidation?

As there are plenty of pros, there are also some cons. This includes:

  • Some of the consolidation loans do carry fees like loan origination fees, closing fees, and annual fees. So, you have to be sure about the money that you will save after consolidation. 
  • Remember that you will only get a lower interest rate if your credit score is good. If it is not good then there might be not much difference from your current rate.
  • Paying off your debt will always boost your credit score in the long run. But you might see a dig in your credit score as the application for a consolidation loan will always have a hard inquiry. But yes, you will recover soon once you repay the amount
  • Debt consolidation is always good for you if you have enough money to pay off your debt. But if you can’t afford to pay the money then you will see yourself struggling for the IRS payment plans clean slate tax of the loan.

It is always better to understand the pros and cons and decide upon the debt relief plan accordingly.