Debt Consolidation
What Is A Debt Consolidation Loan?
A Debt Consolidation Loan converts the unsecured debt of a number of credit cards into a single loan. A Debt Consolidation Loan can be unsecured or secured, depending on your qualifications. A secured loan is backed by collateral such as your home. An unsecured loan may be granted if you have excellent credit or can demonstrate sufficient income to repay the loan. Today, many lenders offer these types of loans and in many cases these loans can be made online or through specialized peer-to-peer lending sites, but you should review all of the loan terms carefully and verify the interest rate and other terms like pre-payment penalties that may apply.
Benefits
- Lower Monthly Payment.
- Lower Overall Interest Rate.
- Single Payment For Rasier Debt Management.
- Closing Credit Cards Is Generally Not Required.
Challenges
- Must Have Good Credit To Qualify For A Loan.
- Often Required To Have Adequate Collateral.
- Must Control Spending Or Debt Will Grow Again.
- Extended Payments Could Result In Longer.
- Pay Off Period.