Debt Consolidation Loans
Debt consolidation loans are loans that one can borrow in order to pay off his existing debts. This basically means that the money you owe is combined into a single loan which has one manageable monthly repayments. You can also consolidate your debts of very bad credit loans no guarantor no broker.
This doesn’t mean that you don’t have to repay all of the money that you owe. Debt consolidation loan help you by reducing the interest rate a little, managing your monthly payments, and spreading the cost over a period of time.
Benefits of Debt Consolidation Loans?
Debt consolidation loan is very helpful for managing your money outgoings.
Reduce your rate of interest
Most of the small debts that you borrow have a very higher rate of interest, that can be credit cards or any other store debts. It can also be a small loan that you have taken out. Debt consolidation loan basically help you to consolidate all these debts and reducing the interest rate by which you were paying.
Reduce your monthly repayment
They help you to make a manageable repayment monthly by spreading the term of the debt. This is basically done by managing the interest rate of the loan, the amount you owe has to be paid in full, just that your repayments are managed. They strive to make monthly payments as minimum as possible on the existing debts.
Help to increase your credit rating score
As all of your debts are consolidated in one, you will be able to pay off the loan without any further debt. This will have a very positive impact on your credit rating as you are not missing any repayments. You should consider checking your credit rating before applying for a debt consolidation loan.
What Are the Types of Debt Consolidation Loans?
There are two types of debt consolidation loans-
Secured debt consolidation loans
In secured debt consolidation loans, you have to provide an asset as a collateral or a security. The asset can be anything like a house, car or a land. If you don’t make the repayment of your loan, you risk losing your asset to the lender.
Short term debt consolidation loans
This type of loan is not secured by an asset. You can get unsecured debt consolidation loans without any collateral if you have a good credit rating.
How to Get Debt Consolidation Loans?
To check your eligibility the lender would take into consideration the debt you owe and your past credit history.
If you have a bad credit score or large debts you can be apply for a secured debt consolidation loan by the lender. However, this will put your asset on risk if you cannot cope with the loan repayment.
People nowadays use personal loans as a debt consolidation loan. If you don’t owe much of an amount and have a good credit score, you can go for a personal loan. This would help you to consolidate your loans and reduce your debts.
What Are Bad Credit Loans?