Directory Image
This website uses cookies to improve user experience. By using our website you consent to all cookies in accordance with our Privacy Policy.

What is debt consolidation loan and what are the advantages of debt consolidation loan?

Author: Diana Wells
by Diana Wells
Posted: Jul 24, 2018

Debt consolidation is a way to make the payment of your debt easier to manage. Instead of making several monthly minimum payments in various accounts, this payment strategy involves obtaining a new loan to combine and cover your other loans or debts. Then you can pay all your debts with a monthly payment. So do some Best Fixed Income Investments to get the consolidation loan.

The consolidation of debts consists of obtaining a debt consolidation loan to pay other loans or credits. It is a solution to reduce the amount to be paid monthly, although it usually involves lengthening debts and in many cases providing new guarantees such as housing.

In this way, you can convert all the monthly payments in a single payment lower than the sum of all the monthly payments that you currently have, what you do is to group the debts into one. So it helps to do Best Income Investments

It is necessary to be the owner of some property, even if mortgaged, in order to carry out the consolidation.

When canceling other debts, as the interest rate of mortgages is lower than that of Home Improvement Loans, credit cards, etc. you save a lot in interest, therefore, the debt is reduced.

This means that the only monthly payment that would have to be paid after reunification is also lower than the sum of everything that was paid before.

Finally, with consolidation it is possible to convert all current debts into a single minor and long-term debt, and pay less monthly.

The requirements to consolidate the debts are:

  • A copy of the
Fixed Income Funds to present it at the bank and check if you are able to pay the unified monthly amount.

  • Have Fixed Income Investment Online to be able to repay the loans.
  • A co-signer, that is, a person who signs to be responsible for the payments if the person does not do so, or a material guarantee, such as a house or a car.

Personal loans to consolidate debts are normally granted to pay the following debts:

  • Credit card debts.
  • Medical debts.
  • Card debts granted by commercial entities.
  • Personal loans.
  • Loans for studies.
  • Bounced checks.

You have to be clear about some aspects before signing a loan for debt consolidation:

  • Loan costs: avoid paying high commissions.
  • Loan interest: normally the interest on the loan will be lower than the credit card. If the interest is too high it does not matter because the loan payments could not be made. It is convenient to get fixed interest so that the monthly payment does not change.
  • Loan installments: the monthly payment must be less than the sum of all the payments separately.
  • Effect on the history: the entities have to explain what the loan consists of before signing it, and there are entities that are not clear in this regard.
About the Author

Get a fast personal and safe Personal Finance loan for home, car on low Interest Rates Comparison with OurMoneyMarket personal loans calculator and Lenders.

Rate this Article
Leave a Comment
Author Thumbnail
Please or Join to add a comment.
Author: Diana Wells

Diana Wells

Australia

Member since: Oct 28, 2017
Published articles: 5

Related Articles