The Disadvantages of Loan Modifications

by tammy on February 18, 2010

If you are like a lot of people there may come a time when you will have to take a long hard look at your finances and this can really be good or bad depending on what your income may be. So, it’s a good idea to be certain you do take the time to evaluate your financial status from time to time and this can be a great way for you to see many things.

Due to the huge recession we have all experienced in the last couple years, it is has landed a lot of us without jobs and this has really caused a lot of hardships for many people. It is a good idea to be certain you try to keep your payments up to date or you will suffer the consequences of having a very poor credit rating.

If you want to be certain you are doing all you can to maintain your credit score, you will want to pay your bills on time. This can be very hard to do when you do not have the money to do so.

Many people will apply for a loan modification when they feel they do not have enough money to pay their bills and this is a great idea for anyone that does not want to get behind on their bills.

A loan modification is when you get the current loan you have modified. This will allow you to have much lower payments when the loan is modified and it will be for good once you use this process.

However, there are certain disadvantages that come along with this as well. One of the biggest disadvantages some people will find when it comes to loan modifications is the fact that there is a lot of paperwork that is involved so this will usually consist of fees. If you don’t mind paying fees, and then again, most all of us do, it may not be as huge a disadvantage if you don’t mind paying extra fees at times.

There are a lot of people that may find this not so difficult to do, even though they may not want to. Another disadvantage to the loan modification is that it may take some time for it to go through, and this will be a huge disadvantage for some.

One final thing to consider is the fact that it may have some impact on your credit score if you do not get the loan paid back in time. This means that unless you are able to pay the loan back in full within a certain amount of time or the current payment it can negatively impact your credit rating so you will want to be sure you do all you can to avoid this, but try to be certain that you are able to make your payments on time.

There are many disadvantages to loan modifications, but advantages as well. So, you will need to weigh out both and this will allow you to come to a conclusion.

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