วันอาทิตย์ที่ 7 ธันวาคม พ.ศ. 2551

The Consolidation Of Your Debt

Debt consolidation is the process by which a debt consolidation agency negotiates with all of a borrower's creditors, to arrive at a low monthly payment obligation to satisfy all your current debt accounts. This results in the necessity to pay just one lump sum of money to a single creditor, the debt consolidation agency, at a lower rate of interest than the average of the sum of the interest rates of all a borrower's debt accounts. This monthly payment is then portioned out to all the creditors of the borrower.

Then comes the task of deciding on the loan amount and the kind of scheme you require. This depends largely on your earnings, credit score, and whether you qualify for the low mortgage rates on debt consolidation loans. A thorough study has to be conducted before taking the major step.

The positive aspects of opting for a debt consolidation loan are manifold. First, it immediately eliminates the necessity to maintain a list of your creditors, their payment dates and interest rates. You will have to pay only one single creditor, the debt consolidation agency, which will look after the rest. It also does away with those warning calls from creditors and attorneys. This step also helps improve the credit rating of a borrower, helping him avail credit in future much more easily. The negative aspect however is that the debt consolidation loan necessitates that you qualify for the loan or mortgage. The absence of a proper security to serve as collateral, makes it difficult right at the first step. If you happen to give your house as collateral, you run the risk of losing it if you default on any installment. The debt consolidation loan often gives a false sense of security, as the debt consolidation agencies often keep mum on certain raw facts.

The debt consolidation loan has the immediate advantage of reducing monthly payments, leaving much to the borrower to indulge in things he may desire. Low interest rates are however, deceptive. With the extra time given to pay off the debt, and the lower interest rates, you actually pay more with their "money saving" schemes. So beware! Also make sure that the interest rates are not introductory rates. Another major point is to make sure that the rates remain stable (not increase) during the lifetime of the loan. Debt consolidation loans eliminate certain penalty charges and fees, apart from imparting money management skills. But while possessing a debt consolidation loan, a borrower is barred from using credit.

Found this article interesting? Then visit our website at: http://debtconsolidationcenter.net for more information on this subject, and also to find hundreds of other articles and resources about debt consolidation.

Gibran Selman takes care of http://debtconsolidationcenter.net a website dedicated to gather information, on and off the internet, about debt consolidation and other related subjects.

[tags]consolidate, your, debts, debt, consolidation, loan, loans[/tags]

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