Credit Card Debt Consolidation
Companies offering debt management and counseling typically use debt consolidation regularly but not correctly. They use this term in a way that they confuse the consumer. When these companies use this term, they may mean any of the following
1- Typically, they indicate an approach similar to debt management where a monthly amount is paid to the agency. This monthly payment is made from your consolidated sum.
2- It can also mean your monthly lump sum payments are paid for credit card debt but they are accumulated so that it can be used for settlement or negotiation for less than 100% of debt.
3- It can also mean debt consolidation loan.
Credit Card Debt Consolidation Loans
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A debt consolidation loan simply means a secured or unsecured loan. Secured loans have collateral security which secures these loans. It can be anything from your home equity to any other thing of value. However, if you are unable to pay off your loan, you will have to give up certain interest in your home. To get a secured loan, you will have to have good credit. If your credit history is really good, you will easily get secured loan on low interest. On the other hand, if your credit score/rating is bad, you will still get the loan in most cases but at a high interest rate. It will come with tough conditions, putting your home equity at a greater risk. To apply for a debt consolidation loan, you will have to use your home equity. You can also take out your existing home equity line of credit to apply for a debt consolidation loan. If you're taking the latter option, you can easily enjoy flexible payments that will eventually become low after first few months.
With unsecured debt consolidation loans, you will have to pay higher interest rate as compared to a secured loan. On the other hand, if you have bad credit, you will have very tough loan terms, which isn't usually worth going for it.
Remember, a secured consolidation loan will put your home equity at a great risk. You will have to make sure that you're making all the payment and if you can't, you should avoid taking out the loan at all costs. Nevertheless, with unsecured loan, you will you will be risking your finances because of unreasonably high interest rates.
Think Money will provide you with everything you need to know about debt consolidation in the UK. It also helps you understand repaying credit card debt.
CALL US NOW! 1-800-871-6817.
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