If there are advantages to consolidating your debt there are disadvantages as well. These are the foremost disadvantages of debt consolidation.
· Paying more. While you’re monthly payments are reduced through debt consolidation you and at paying more on the overall cost of the debt. This is because a debt consolidation loan or programme typically has a longer period of duration than the original debts. While you be paying a lower rate of interest and a lesser month installment you’ll be paying a longer able to time each means that the cost of the debt increases over the long run.
· Securing unsecured debts consolidation loan. The creditor cannot take your house for your automobile if you do not pay your credit card bills. However if you take out a debt consolidation loan on your Mortgage for your automobile and cannot make the payments in the future the creditor will be able to foreclose on your house or repossess your hard in order to recover is money. Securing unsecured debts by using a secured consolidation loan, such as a second Mortgage on your home, is considered to be high risk since you risk losing your house if you cannot make the payment on your debt consolidation loan for any reason in the future.
· You may need somebody to cosign. If you are not using some assets as security to take out a debt consolidation loan then your creditor may require you to get someone reliable to cosign on your application.