There are certain things you need to know about debt consolidation loans. You see, debt consolidation is the process of grouping all your secured and unsecured debts together, using a single loan to repay them at once. The loan used to repay usually has a longer repayment period and lower monthly installments than your older debts. The process is meant to reduce your financial burden, while having a longer period to repay all your debts.
Having numerous small loans can make your monthly payments extremely high and impossible for you to pay. With debt consolidation loans you get lower payments and more often and not a lower interest rate. This gives you the opportunity to plan your life with your family instead of being a slave to your creditors.
If you have collateral then you have a better chance of getting a lower interest rate. If you are in danger of having to file bankruptcy this may be a better solution. Your bank may be able to purchase the bank at a better rate if they see bankruptcy in your future without the loan. This may encourage banks and credit unions to give you a loan.
Debt consolidation loans as the solution to your financial woes
- If you can no longer make your monthly payments this may be a solution to your monthly problems.
- One large payment is normally cheaper than numerous small payments.
- If you have collateral you will probably get a better interest rate than you have with all your small loans.
- A debt consolidation loan is better than a charge off or having to file bankruptcy.
- Sometimes you may want a debt consolidation loan to take advantage of a new program and better interest rate.
Choices of debt consolidation loans
- Unsecured Debt Consolidation loan (there is no collateral)
- Government debt consolidation loans (these are made available by the government)
- Bad credit debt consolidation loan (when the debtor does not have good credit history)
- Secured Debt consolidation loans (there is collateral)
- Credit card debt consolidation loans (made available for debts which arose through the use of credit cards)
What can you do if you do not want debt consolidation loans?
- There are credit counselors that you can talk to and they will talk to your debtors to come up with a solution you can live with in your life. Many times the solution is debt consolidation.
- If you have a little money you can ask for a debt settlement and this reduces the amount you have to pay to settle your debt. This normally happens when you are very behind on your payments.
Debt consolidation loans are on the rise now because it is a way to save monthly money and receive a better interest rate. If you think that bankruptcy is your only option you are wrong there are alternatives and you should try every avenue before filing bankruptcy. If you want to save your credit debt consolidation may be your only solution. Debt consolidation loans should be considered by many families, including yours, because they preserve your credit.