Should You Consolidate Your Loans?

In today's economically challenged times, thousands of Americans are finding themselves struggling with financial difficulties. During a time when buying and selling homes was easier, many loans were being taken out to purchase that dream home. Today, dreams are being challenged as the financial climate in America changes. As the American dollar's value struggles to stay above water, families across the country are feeling the edge.

Should you consolidate loans or not? Examining the Pros and Cons.
There are some pros and cons to loan consolidation. To determine whether or not you should consolidate loans, it's important to think long-term, not just short-term relief. Let's take a look at the pros of loan consolidation.

Pros:
1. One payment to one lender
2. Time to repay loan can vary according to what you need.
3. A lender can work with you to extend a repayment schedule
4. You can lock in low fixed interest rate and avoid the types of rates that go up each year.
5. Lower monthly payment
6. Saving extra money each month
7. No penalties for early payment of loan

Cons:
1. Although you may receive a low fixed rate on a consolidation loan now, if the interest rates go down, you're locked into your current rate.
2. Your consolidation loan may have fewer deferment options than your original loans, so you best check with your lender to see if cancellation and forgiveness options may be affected.
3. Longer repayment of loans means paying more interest over the years.
4. You might be tempted to start using your credit cards again cause you feel you're in the clear.

Student loans, credit card bills and etc. may be driving you nuts each month. Consider those credit card offers you receive in the mail. Before throwing them out in disgust, check out their interest rate and consider consolidating some of your credit into one credit card with a low rate. However, be careful not to open a bunch of new credit lines and get caught back up in the credit trap!