The Proper Way To Consolidate Your Debt

The Proper Way To Consolidate Your Debt
Consolidation loans are not for everyone and can be dangerous if you aren't careful. There's a lot of people out there who aren't paying attention when they consolidate their loans. Sometimes the interest rate can be higher than the rate you currently have on your debt. If the loan's APR is higher than your credit cards, you'll lose money and should not close on the loan.

You Cannot Borrow Your Way Out of Debt!
Consolidation loans are DANGEROUS for impulsive people because all you are really doing is shifting all your debt from one place to another, effectively OPENING ANOTHER CHANNEL OF CREDIT, while freeing up your credit cards. Some idiots then proceed to fill up their credit cards again, now they have double the debt they started with, and they are paying up to 22% on their consolidation loan because they weren't paying attention to the APR when they signed up. Some Loan companies are very unscrupulous and make it look like they are eliminating your debt or they hide the APR from you.

Don't Forget Auto Insurance
Don't overlook this important part of car buying, you'll be in for a shock later. Get a quote on the car you want. You'll be surprised how much some new cars cost to insure. Some cars are very difficult to insure. Know your insurance costs before you buy a car, and plan your budget accordingly. My 25 year old friend pays $2400 a year for insurance on his 1997 Mustang, and the GT is even much more! That's $200 per month! This is where people make a big mistake, forgetting to include insurance in their budget. If you're buying a car on the hairy edge of what you can afford, insurance payments will drag you under. Insurance payments are part of your monthly cost of ownership. Read up on how to buy insurance, definitions of coverage and how to avoid scams in our insurance chapter All About Auto Insurance. Auto insurance sites Comparison Market, GEICO and Progressive Auto Insurance give you free online auto insurance quotes, so be sure to get pricing from them too.

Extended Warranties
For extended an warranty, try Warranty Direct. I talk much more about them in detail in our online guide for warranties called How To Buy An Extended Warranty And Avoid Scams. You want to get an online warranty quote before you go to the dealer, so you'll have something to compare the dealer's extended warranty price with. Never show up at a dealer to buy a car without a free quote from an online warranty site.