Debt Consolidation and it's meaning

“Debt Consolidation” ? Covering Debt consolidation and its meaning, difference between secured and unsecured consolidation loans ? and why someone would want one. Debt consolidation is one possible debt solution that may be available to you if you’re experiencing money problems at the present moment. What is debt consolidation? Debt consolidation is the process of taking out one single loan to pay off all your outstanding unsecured debts such as personal loans and credit cards. A debt consolidation loan can be either a secured or unsecured loan. Secured debt consolidation loan This type of loan allows you to consolidate all your existing unsecured debts, things like credit cards and store cards, into one loan which is secured against an asset. This asset will usually be your home. Failure to keep up with the repayments on your secured debt consolidation loan could result in your home being repossessed. Providing security for the loan in the form of your home usually means you will benefit from a much lower interest rate than you were paying on all your cards previously. Unsecured debt consolidation loan This type of loan will also enable you to consolidate all your existing unsecured debts into one loan which covers them all. However, this loan won’t be secured against any of your assets. The downside to this type of loan is that because you’re offering the lender no security at all for the money that you’re borrowing from them, they will usually charge a higher interest rate than what they would charge for a secured loan. An unsecured debt consolidation loan may still offer you a lower interest rate than those of your store and credit cards. Why apply for a debt consolidation loan? A debt consolidation loan is not suitable for everyone and your personal circumstances will determine whether it’s the right option for you, and your financial situation at this present time. Debt consolidation loans have a number of benefits, these include; o A lower interest rate on the money you borrow o Only having to deal with one creditor o Reduced monthly payments There are disadvantages of debt consolidation loans too, so it’s important to get impartial debt advice based on your own situation before making a decision to go with one or not. If you’re struggling with debt and thinking about debt consolidation as a solution, it could be for you if; o You are struggling to make your monthly credit and store card interest repayments o You are finding it hard to cope with lots of different creditors and their demands o You are a homeowner and want to reduce your monthly outgoings. Think of getting a debt consolidation loan will make your life easier and also save you money in the long run.