What loans are available for debt consolidation

If you like spending and managed to get a large amount of debt, you may consider a debt consolidation loan to relief some of the pressure on your finances. A debt consolidation loan is a loan that gathers all your previous high interest rate debts into one with a lower interest rate, but a longer repayment period.
Consolidation loans divide in secured consolidation loans – where a property is used to secure the loan, and unsecured consolidation loans – no asset is used to guarantee the loan will be repaid.

Depending on the type of borrower, you can run in one of the following scenarios:

You are a college graduate and you wish to consolidate your debts. This can be done through a student consolidation loan, directly through the federal government or an approved Federal Family Education Loan lender. There are no fees to pay upfront and maximum interest rates are set by regulations. Still, student consolidation loans aren’t as flexible as others, so only certain types of debts are included.

You are a big spender and your debts builds up on short-lived, non-essential purchases. You might want to consider the option of professional credit counseling.
Against a fee, a trained professional will help you learn to build a budget and tame your spending habits. Also, they can negotiate with your creditors for the amounts you owe.

You are a homeowner and you managed to build some equity over the years. This can be used to pay off bills, help to reduce and pay down debt through a home equity loan.. Typically, interest rates are lower than other types of loan, but the main disadvantage is that it puts your home on the line for your debt.

You are not a homeowner. The only option available is that of an unsecured loan. You will not risk any property but you will have to accept the high interest rates and higher fees.


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