When you take loans, you get into debt.
When you take loans from many lenders, you have multiple debts.
Multiple debts are real headaches.
This also increases the risk of defaults and you have additional pressure of repayments.
Taking debt consolidation loans can solve your problems.
This is also a loan and means another debt in your account.
However, it has several advantages.
It helps you consolidate your other debts, and thus to bring down the interest rates as applicable.
This means you have to repay less amount than what you would have to, if you have to repay debts to several lenders separately.
These loans are designed to help you out of your debt-ridden situation.
Debt consolidation loans can be of secured or unsecured variety.
In the case of secured consolidation loan, you have to keep your property as security.
This is known as collateral.
This gives you access to a good amount of cash as your home equity can be utilised to good ends.
Furthermore, your interest rate is much lower and that too with a flexible repayment scheme.
This means that your monthly instalments will come down to a conveniently low amount.
As these types of secured loans requires one to pledge property as security, only homeowners have the privilege to avail to it.
Inability to repay can result in the threat of repossession.
As far as unsecured consolidation loan are concerned, they can do without a collateral.
However, herethe lender charges a high rate of interest.
And the term and tenure of repayment would be kept short.
These loans are good if your loan amount requirement is not very high.
Debt consolidations help you to bring down the payable rate of interest and under a single account, helping you to manage your debts better.
You can use these loans for meeting any other requirements as well other than just merging your debts.