Personal Loan for Debt Consolidation
Are you caught in the dilemma of mounting credit card bills and higher interest rate loans?
Are you tired of making multiple payments to different lenders on different days of the month?
Do you want to get out of it?
If your answer is ‘yes‘ then a debt consolidation loan can render you valuable help in this regard. Here is some advice to extend you a helping hand.
The debt consolidation loans unify all the debts of the borrower that one owes to various lenders and pays all of them with a lump sum payment. Now the borrower has only one loan to repay which is the debt consolidation loan.
This type of personal loan offers a simple solution to the puzzle of money management, thus making life much simpler. Such loans are given after taking into account all outstanding bills and loans by combining it into one single loan. The monthly payments are kept lower than all the individual loans and debts combined together. The rate of interest is low and also given more time at hand which gives a chance of saving some money.
These loans definitely don’t belong to the category of the various other loans that are commonly known, like car loans or home loans.
There are two types of debt consolidation loans – secured debt consolidation loan and unsecured debt consolidation loan.
Secured debt consolidation loans use collateral to back the loan in case of default. These types of loans usually provide the lowest interest rates since the lender’s risk is offset by the collateral.
Unsecured debt consolidation loans address the debt burden perfectly when you don’t have a home or property against which you can acquire loan, or you don’t prefer to offer your home as security. Security is not required in these loans. Here, the interest rates are higher than in the case of secured loan plans but there will be an overall reduction in your outgoing.
Before selecting a bank should consult a Credit Counselor. The advantage of having a good Credit Counselor is that they could mediate and negotiate between debtor and creditors. They would do a comparative study of the interest rates offered by various banks and also the terms and conditions of unsecured debt consolidation and choose the best one. The Credit Counselor also ensure that you have ample time in hand to stabilize your finances and also that you pay your money in small installments.
Once you have chosen the bank and gone ahead with the formalities of loan application, you can breathe easy and let the loan take care of the rest. A Debt Consolidation Loan can contribute significantly in your effort to come out of your debt maze.