Question : Is interest rate the most important thing when it comes to consolidating debt?
because financial experts say its the least important factor. They say people should ask themselves what is their total cost and how soon will they be out of debt? and finally, compare interest rate.
- asked by LOL
All Answers:
Answer #1
I would say it is number 1. If you don't savemoney, why do it?Number 2 would be the amount ofpayment as compared to the pre-consolidation.
- answered by kckid2
Answer #2
Depending on how large the debt is, if it's amortgage, the interest alone can be extortionate,and then it is the most important thing, if thedebt is small, then saving becomes moreimportant..Good luck..
- answered by Amber
Answer #3
I would say the most important thing to know aboutconsolidating debt is that it doesn't tend to helppeople get out of debt. Most people whoconsolidate their debts end up running up moredebt and being back in the same situation they arein now if they don't change their habits and stopborrowing money!
- answered by Jen G
Answer #4
The most important factor when debt consolidatingis what you can afford. If you find that you areseriously over-stretched with your repayments,debt consolidation can assist this. The reasonexperts say interest rate is not important, isbecause most people look to consolidate cards andpersonal loans into their mortgage. This makes ahuge difference to your monthly outgoings, butdoes mean the payment is spread over a much longerterm. generally, when property prices are rising,you may sell your home and move to another one,and as such the debt will move with you, but yourequity will have increase, so the overallfinancial burden is much less significant. Hopethis has helped
- answered by Carl Q
Answer #5
Nope. Its the total cost and time frame of thedebt that matters. Interest rate doesn't doanything for people. It just sets the payment.What has interest rate really done for people?Kept them in debt forever. Why? Companies are notproviding any game plan to get people out of debtexcept for one, which Primerica FinancialServices, where Citicorp Trust Bank is the lenderof the loan.
- answered by Primerica Debate Team
Answer #6
The interest rate can be the biggest factor butcan also be the smallest. It just depends on howmuch you owe on each item. Also what cost youmore in interest, do the math to figure out whatyou be better to pay off 1stFor example let sayyou have 2 debts1) 18,000 @ 5% payment due 300 (this would take 5 years and 10 months to payoffand about 3000 in interest)2) 6,000 @ 21% payment due 150(this would take 5 years and 10months to pay offand about 2200 in interest)The1st debt is where you would pay the most intrestso in this case it would be the one you should payoff 1st, but if you had an extra 100 bucks a monthyou could apply to the second you could have thesecond payed off in 2 years 10 months then rollover all that money you where paying on the seconddebit and have it payed off in 1 year and 8 monthslater. ( This plan takes 4 years and 6months)Where if you applied that 100 to the 1stdebt. It would take 4 years and 3 months to paythis off. You roll over the money and have itpayed off 4 months later (This plan takes 4 yearsand 7 months)I sould have used some diffrentnumbers but I hope you get the idea. If you havea few that are lower in interest rate and youcould easly pay off in the next few months I wouldpay those of 1st, one it makes you feel better. 2you can roll that money over onto another bill andpay off your debt faster.Good luck!
- answered by TLC4theworld
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