Debt Consolidation Loan

Being in debt is definitely not fun, you would like to settle the loan debt as soon as possible. Here comes debt consolidation loan for more ease.

Debt consolidation loan is the process of taking out one loan to pay off one or more unsecured debts. The purpose is to prevent you from making several payments rather than just one, which is more simple and manageable. This also helps you to lower the monthly payment along with the low-interest rate.

Debt consolidation loan is usually preferred by the people who are paying off multiple debts at the same time with several banks like a student loan, personal loan, credit card bills etc. That are mostly unsecured i.e not tied to any asset. With so many loans, it gets difficult to manage to pay off all of it. On several occasion, one misses out on making repayments or fails to manage the loan efficient by controlling high-interest rate affecting the payment process. To prevent you from such situation, debt consolidation loan offers the right way to it.

There are two different types of debt consolidation loans. These includes -

  • Debt Consolidation Through Secured Loan - you can consolidate all your unsecured debt via taking up a mortgage or loan against the property, Loan against your car, equity, Gold, Life insurance policy, cash value etc. the main advantage of going with the secured consolidation is that you will have to pay lesser interest rate. Also, if it is your property then you might not have to pay the tax. Therefore, it is more affordable and less risky for you.
  • Debt Consolidation Through Unsecured Loan - This one is quite common and is done when you do not want to take any pledge of your collateral. There are many banks that offer the type of consolidation at lower interest rates, though it remains higher than the loan through secured loan. Also, while taking up the same do check for the bank providing low rate fro the first month, offer to the company you work etc. The benefit here is that your collateral here is not at risk.

However, before you plan on taking up debt consolidation loan to end the miseries related with the non-payment of your debts, do opt for the debt counseling. There are various agencies that can help you consider the same as per your requirements.