3 reasons to not do a consolidated credit

Consolidated Credit is having a considerable increase of demand in recent times – but who is looking for this solution has really investigated and knows the disadvantages?

The consolidated credit may be a truly beneficial solution for people who are facing a complex financial situation, but one must also see that consolidated credit has also drawbacks:

1 – You´ll pay a lot of money in interest rates. By piling your short-term credits to a long-term (like housing) you will certainly pay much less monthly, but remember that you will have to pay your credit and rental car until many years from now, probably 20, 30 or more years, depending on the term of your mortgage loans. In the end you will pay several times the money they borrowed you because of the long deadline you have chosen.

2 – Penalty for anticipation. As in almost all the credits if you want at some point in your life to pay off the debt you may be penalized for it. If in a short term credit this may be little more than annoying, and to not be penalized, you must wait that the loan comes to an end, in a consolidated credit, which usually extends for tens of years, it could well be very damaging, because we have to live with the debt until the end, unless we are willing to pay an undeserved penalty.

3 – Low Reduction in case of not having mortgage. If you do not have a house to give as security, the reduction in the monthly payment may be limited and uninteresting, just making your debt situation worse.
Conclusion: You should only choose a consolidated credit if you cannot already pay the actual monthly fees. This solution will make your situation much easier at short term, but you will be in debt for a longer period, and the longer you are in debt, more interest rates you´ll have to pay and more likely it is to be unable to pay the “render” and waste all that you have already paid.

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