More Information about
Debt Consolidation
A debt consolidation loan is a loan taken to help repay your other loans. Debt consolidation loans help you organize your debts by consolidating them into one monthly payment, oftentimes at a lower interest rate.
Some debt consolidation loans are home equity loans. Learn more about home equity loans.
People often choose debt consolidation loans to secure a lower or fixed interest rate and because they want help organizing their debts.
Qualifying for a Debt Consolidation Loan
To get a debt consolidation loan, you must typically have a good credit score, the ability to repay the loan and you may need to have equity in your home. You want to think about pursuing this debt relief option only when you can afford to repay the loan and understand the consequences of defaulting on that loan.
More Facts about Debt Consolidation:
- Payback can take as long as 10 to 20 years depending on debt balance and your ability to pay.
- You pay back the full amount of credit card balances, plus interest and any fees.
- These loans typically require ownership of a home or a pledge of collateral. (Learn about Home Equity Loans.)
- Defaulting on a Home Equity Loan could cause you to lose your home or the collateral you pledged.
- A transaction fee is usually required upon closing or it is built into the interest rates.
- You must qualify for debt consolidation loans, and those who qualify are usually not debt settlement candidates.
Remember that a debt consolidation loan helps you to reorganize your debts to make it easier to pay them off. It does not relieve you of your debt burdens. This option is a viable debt relief option only when you can afford to repay your debts in a consolidated monthly payment.
Other Debt Relief Options Consolidate Debts
A debt consolidation loan is not the only way to go from multiple monthly payments down to just one monthly payment. Other debt relief options may include some form of debt consolidation, (e.g., debt negotiation, debt management plans, consumer credit counseling services) but these options do not typically involve taking out a loan to consolidate your debts.
To learn more about how a single monthly deposit can benefit debt settlement clients, get your free, no obligation consultation with a Debt Shield consultant today.
