Disadvantages of Debt Consolidation
Before you sign on the dotted line, be sure you understand yourself and how you got in this situation in the first place. The major disadvantage of a debt consolidation loan is that if you lack self-discipline or think the debt problem is resolved, you may set yourself up for major financial problems in the future.
Debt consolidation can pave the way for continued poor spending habits. If you dump your hard won equity into a financial initiative to pay off your bills quickly, you may end up with a longer mortgage term (reduced lifetime savings) as well as a still as yet unbalanced budget.
In addition, debt consolidation doesn’t always work as planned. If you get involved with a small lender who goes out of business or passes your loan along to a less than scrupulous third party, you could find yourself in legal and financial deep water.
