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After viewing explanatory information on loans and lenders, consumers in the study reported: "This intervention helps people fully understand the importance of careful money management," says Bolton."In addition, it explains to consumers the downsides of debt consolidation loans and the importance of obtaining a low interest rate and reasonable term if you end up choosing to consolidate." NEFE encourages consumers to take a similarly broad approach, evaluating their long-term debt situation instead of focusing only on their current circumstances, and understanding the terms of any debt management solution before signing an agreement.For example, if the loan is secured with collateral such as a home or other assets, they might incur up-front fees for appraisals, credit checks and attorney services.If clients are late on payments, they may be charged late-payment penalties or suffer an increase in their interest rates. Many consumers mistakenly believe that lenders, often labeled as "credit counselors," are obligated to give them the best rate for which they qualify, says Lisa Bolton, Ph.Being exposed to that kind of message, you tend to relax and loosen the reins on your spending." In addition, knowing these loans are available may prevent consumers from taking steps to improve their financial situations, according to Joel Cohen, Ph.D., a distinguished service professor emeritus at the University of Florida, who also contributed to the research study.For example, a five-year loan for ,000 at a 10 percent interest rate would have a consumer paying about 5 monthly and owing total interest of ,496.Extending the loan length to 15 years would knock down the monthly payment to 5, but it would increase the total interest to ,685.

What many people do not realize is that the stretching out of the loan term leaves them with a greater overall debt burden, which must be endured for a longer time.

"They're trying to sell you a loan for the benefit of their institution, so you need to shop around." According to the research, the one-sided marketing of debt consolidation loans doesn’t just make the product look more favorable to consumers; it also could prompt people to continue with risky financial behaviors.

For consumers feeling financially stressed, a debt consolidation loan may seem like a "get-out-of-jail-free" card, and it may lead them to continue to spend and borrow beyond their means.

"The marketing of debt consolidation loans makes people less likely to manage finances carefully," says Bolton.

"These loans seem like a sure way to avoid being burdened with debt problems, showing that if you do run into trouble, you can get a debt consolidation loan.

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