What is a Debt Consolidation Loan?

What is a Debt Consolidation Loan?
Do you sit down at the end of the month only to stress
about the shear number of bills you have? Are most of your
bills in the form of credit card payments or other debt
obligations? Are you noticing that your interest rates vary
for each different debt.? Would you like to potentially
save money? Would you benefit by having all of your debt on
one single account and by having only one bill to pay? If
you answered, yes, to any of these questions, then a debt
consolidation loan might be for you. Find out exactly what
a debt consolidation loan is in this article.

A debt consolidation loan is a type of loan that takes all
of your debt and consolidates it into a single loan. The
main advantage is that you have only a single payment to
make towards your debt each month. If you've had student
loans and have consolidated them into a single
consolidation loan, then you know the benefit already.
However, there are a couple different types of
consolidation loans that you need to consider. These are
secured and unsecured consolidation loans.

Secured consolidation loans are loans that you put up
collateral for such as real estate. There are several
advantages of a secured consolidation loan over an
unsecured consolidation loan. The main advantages include
having generally lower interest rates, lower monthly
payments and overall better loan terms. The major
disadvantage is that if you default on your loan, you will
lose whatever you put up as collateral.

The second type of debt consolidation loan is an unsecured
loan that puts all of your debt into a single loan. While
these generally have higher interest rates and less
favorable loan terms than a secured loan, if you have no
assets or are afraid of losing your real property, then the
unsecured loan might be for you.

Remember, taking out a debt consolidation loan should not
be a used to overcome poor debt management skills. If you
are having serious financial trouble because of your debt,
then you need to seek professional debt counseling in order
to find more long-term solutions such as learning how to
manage your money and your credit. If you don't learn to
manage your credit and money and minimize your debt, a
consolidation loan will not help you in the long run. In
fact, a consolidation loan has the potential to make your
debt situation worse if you are not practicing good
management skills.

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For more ways on how to save money and manage your debt, go
to http://www.creditmanagement101.com
The author runs http://www.creditmanagement101.com - a
website dedicated to issues concerning debt and credit
management. Learn about responsible credit management, your
credit score, debt management plans and credit counseling.
Also find ways to save your money by maintaining a livable
budget that reflects your means.