Today, a lot of Americans are finding themselves trapped in between the various high-interest debts.
The inflating rates of interest have been a great cause of worry and stress to most of them, who are really struggling to pay it off quite unsuccessfully.
With such a precarious situation, a good number of Americans find it impossible to pay off the principle debt amount most of the times.
But luckily, the days of worry and despair can be erased off totally chiefly due to a package called debt consolidation.
This intends to help out all those who are victims of excessive debt and are reeling under the enormous interest rates that they are forced to pay.
What is Debt Consolidation? A debt consolidation is a plan by which all the ongoing high interest debts that are eating you up can be converted into one combined loan with a lower rate of interest.
In simpler terms, the various major bills that trouble you frequently can be altered into on easy monthly payment facility that will no doubt relieve your burden to a great extent.
The debt consolidation loan comes with two major benefits that will make you really happy.
The first one happens to be the fact that now, instead of making separate payments, there is just one bill that you will have to pay, that too on a monthly basis.
This may be quite simple, but you will be saving a lot of bank visits not to mention the hassle of writing out various cheques at different times a month.
The second major benefit of availing a Debt consolidation loan is the amount of money that can be saved.
Instead of the hundreds of dollars that you pay as interest every month, you now pay only a part of that amount as payment of your debt consolidation loan.
This obviously means an increase in your saving potential, which is indeed a very welcoming fact.
Types of Loans: Secured vs.
Unsecured Speaking more of debt consolidation loan, there are two types of them, namely secured and unsecured loans.
In a secured loan, as the name implies, the bank requires some sort of security or collateral to pass the loan.
This is a very normal procedure from the banks point of view, as it needs some security from your side, like your home or property, so that it can take over it, if you are unable to pay back the loan.
But in the case of an unsecured debt consolidation loan, the collateral security is waived off and instead, the bank charges a higher percentage of interest to balance out the risk.
But if you are someone with a bad credit history, the possibility of getting an unsecured debt consolidated loan is quite remote, though not entirely impossible.
These days more and more banks and financial companies are trying to attract people with a variety of schemes regarding debt consolidation loans and it would be in the interest of the person availing the loan to generally research each of these institutions before taking the loan.
There are several of their websites where you can source out necessary information before you sign on the dotted line.