Are you a compulsive buyer? Do you have many credit card bills pending? Are your bills further piling up? If yes, it seems that you are a right candidate for debt consolidation.
It is very common to take out a debt consolidation loan and repay your existing debts. Many compulsive buyers who have a fetish for shopping end up in several debts arising out of credit cards and store cards. Such borrowers can consolidate their debts that to make debt management easy.
Debt consolidation helps you in converting your various petty debts into one easily manageable loan. This process also enables you to save money if the debt consolidation loan that you are taking comes at a low rate of interest than the overall interest of your existing debts. Usually, such loan comes with a lower rate of interest as compared to the interest rate that you may be paying to credit card companies. Thus, it is an incentive enough for you to opt for debt consolidation.
Debt consolidation loan can be a secured or unsecured loan. Sometimes, it become difficult to get an unsecured debt consolidation loan because the lender perceives that you are financially unstable and may not be able to honour your financial commitments. So, the lender may refuse you a loan in the absence of collateral. On the other hand, secured debt consolidation is quite easy to get. This loan requires you to furnish collateral that is usually your home.
Since the lender gets your home as a security, he can offer you the loan at low rate of interest. The repayment period is also long enough to provide you with affordable monthly installments. However, you must understand that if you extend your repayment period, you will end up paying some extra money as interest. So, decide the loan period carefully keeping monthly repayment capability and the total interest in mind.