Debt consolidation loan is the best resolution for all your accumulated loans for which you were paying a high interest rate. You can replace all your accumulated loans into a single debt consolidation loan and also with a low interest rate. It is better to opt for Debt consolidation before everything gets out of control. There are two types of Debt consolidation loan available secured and unsecured personnel loan.
Secured consolidation loan-In this type of loan you will have to keep your property or house as security deposit against the loan and in case you are not able to pay back the amount. It would result in loss of your property or house.
Unsecured debt consolidation loan-In this type of loan you do not have to own a large property or house to get your loan approved. But in this type of loan you will end up paying more, since it is a loan without owning any property or home and require a long time to repay the loan amount .Moreover this type of loan doesn’t provide any tax benefit to you.
When to opt for a debt consolidation loan:-
1. If you are suffering from accumulated loan and unable to manage your multiple bill payment.
2. If you are not able to manage with different creditors at one time.
3. If you want to make all your bills into one monthly payment.
4. And last but not the least you want save after repaying all your debt.
Benefits from unsecured loans:-
- Helps to consolidate debt-With debt consolidation loan you can pay all your unsecured bills like payday loan, credit cards, and medical bills etc at one single payment plan. So you will have only one single affordable loan to repay,
- It reduces stress-When all your loans are made into one repayment plan then you will not have to deal with several creditors thus help you to reduce stress.
- Helps to get rid from collections calls-Since all your bill payment are taken care by debt consolidation loan, you get rid off getting harassing calls from your creditors and collection agencies.
- Interest rate can be lowered-You can save a good amount by opting for unsecured loan for consolidating debt available in the market with low interest rate, even lower then credit card interest rate.
- Improves your credit score-Paying off all your accumulated dues with a single debt consolidation loan will help you to improve your credit score with positive impact.
- Helps in Budgeting-Since now you are paying all your dues in a single monthly affordable plan you can easily budget your plan accordingly.
There are some things which you should keep in mind before choosing the best consolidation loan which I will be discussing in my next post..