Do you sit down at the end of the month only to stress about the shear number of bills you have? Are most of your bills in the form of credit card payments or other debt obligations? Are you noticing that your interest rates vary for each different debt.? Would you like to potentially save money? Would you benefit by having all of your debt on one single account and by having only one bill to pay? If you answered, yes, to any of these questions, then a debt consolidation loan might be for you. Find out exactly what a debt consolidation loan is in this article.A debt consolidation loan is a type of loan that takes all of your debt and consolidates it into a single loan. The main advantage is that you have only a single payment to make towards your debt each month. If you’ve had student loans and have consolidated them into a single consolidation loan, then you know the benefit already. However, there are a couple different types of consolidation loans that you need to consider. These are secured and unsecured consolidation loans.Secured consolidation loans are loans that you put up collateral for such as real estate. There are several advantages of a secured consolidation loan over an unsecured consolidation loan. The main advantages include having generally lower interest rates, lower monthly payments and overall better loan terms. The major disadvantage is that if you default on your loan, you will lose whatever you put up as collateral.The second type of debt consolidation loan is an unsecured loan that puts all of your debt into a single loan. While these generally have higher interest rates and less favorable loan terms than a secured loan, if you have no assets or are afraid of losing your real property, then the unsecured loan might be for you.Remember, taking out a debt consolidation loan should not be a used to overcome poor debt management skills. If you are having serious financial trouble because of your debt, then you need to seek professional debt counseling in order to find more long-term solutions such as learning how to manage your money and your credit. If you don’t learn to manage your credit and money and minimize your debt, a consolidation loan will not help you in the long run. In fact, a consolidation loan has the potential to make your debt situation worse if you are not practicing good management skills.
No one wants to live in debt. The best way to regain financial security is to establish a plan for the elimination of debt. Debt consolidation is one way to set up this type of plan and to pay down debt in an efficient and organized manner. When you are looking for credit debt solutions, consolidation will represent many of the options that you discover.The term consolidation can mean several different types of debt elimination. In most cases, you would work with an organization that will walk you through a three step process that is designed to help you become debt free. Bear in mind that this includes unsecured debt, such as credit cards, and most likely will not include things such as mortgage and car loans that are secured with a form of collateral. There are also programs that offer consolidation loans that pay off all of your debt and leave you with a single monthly payment to pay off the loan.During the process, you will work with a professional to do a complete assessment of your unsecured debt. You will be required to provide them with information about every unsecured credit account you have. Then the representative that you work with you to help to calculate the total amount of your debt. Then, the person that you work with will contact each of your individual creditors to work toward reducing the overall amounts of each of your debts. This may be through interest rate reduction, interest forgiveness or sometimes it could be through principal reduction. Creditors would rather accept less than accept nothing should you file for bankruptcy. Finally, you will be presented with a consolidation plan where you make a single monthly payment until your debt is eliminated. You make the payment and the consolidation organization will pay your debts on your behalf as agreed with the creditors.There will usually be no cost to you upfront for these services, until the time where the plan for repayment is presented to you. At that point, you may be required to pay a few hundred dollars in order to establish the payment plan. Each month, you will most likely be paying a monthly service charge to the consolidation agency for their work in helping you to repay your debt efficiently. Once your debt is eliminated, you will no longer be required to make monthly payments.
Are you thinking of consolidating debt, perhaps credit cards or store cards or just general consumer loans but you have some black marks on your credit file?Even if you have had debt problems in the past, there are many debt consolidation loans that may still be available to you to help you get out of debt.There is almost always some form of credit available to you no matter how bad your credit history is and in fact, there are many companies that specialize in debt consolidation loans to people with bad credit.Generally, because you are deemed a higher risk, you will not be able to get the lowest rates but there will normally be some form of credit available to you.Here are two of the borrowing options for people with poor credit. There are often other options available as well and you should always seek professional help before committing to anything.Secured Loans
The biggest problem for lenders when taking on someone with bad credit is that they may not repay the loan. If you are prepared to guarantee the loan with something (often a house), the risk becomes much smaller for the lender and so you will find it much easier to get debt consolidation loans if you are able to provide security for the lender.This does not mean that you cannot get an unsecured loan; they will just be harder to find.Debt Management Plans
This is another option for you if you are have debt problems and have a bad credit history. It is generally used to try to avoid an IVA and bankruptcy and is much less severe.You will do it through an advisor and they will negotiate a payment plan with your creditors where you pay an agreed amount for a set period and then the debt is written off. Often with this plan, you may not end up paying the full amount that you owe but it will further negatively affect your credit record.