What is Debt Consolidation? Debt Consolidation Loan is the process of taking a loan to pay off the other types of loans including credit card loans, home loans, student loans, consumer loans. Using debt loan, multiple debts can be paid with a single payment and it is considered as the best of the solutions to pay back debts or reduce debts. The debt loan is regarded as ‘Personal Loan’ that is used to pay back debts incurred because of credit card loan, education loan, consumer loan and other loans and mortgages. The concept of a debt consolidation loan is very simple and quite beneficial to people. It is the transfer of debts from one or more high interest loans to a single larger loan with a lower interest rate. The most popular and efficient way to get rid of debt from credit card loan is to get it transferred to a home equity debt consolidation loan. An average American carries nearly an amount of $10,000 in credit card debts and there are many people whose credit card debts have reached the limit of $100,000. It becomes very difficult to pay off these debts especially when the interest rates are high. It carries an interest rate of 20% or more while one will have to pay an interest rate of less than 10% after consolidation. Debt repayment can be reduced to several hundred dollars a month. But people often misunderstand this concept with ‘debt consolidation agreement’, which is not a loan. Brokers often misuse the term to provoke high interest second mortgage or refinance of the home. There is big advantage with ‘debt consolidation’. If credit card debts are not paid on time then the companies send collection agencies to recover the money because the debts are not secured. However, using consolidation programs, the debt can be secured against the home equity. This also holds an edge over education loan and consumer loan. These loans are meant for specific purposes and have high interest rates. The calculation of loan is done on the basis of home equity and the previous loans for which the consolidation is being done. A consultant can help putting the property in their best use. The amount of tax also reduces because the equity loans offer low tax rates and other schemes to help against tax. People can draw huge benefits from debt consolidation but it is a fact that your house is at risk. Disciplined payments are still your best option and can help more than any number of programs.   Back     411 Web Interactive. Customer Care - Privacy Policy Issues 14100 W. Olympic Blvd 15th Floor West Los Angeles, CA 90064 800.706.6225 x6910 Effective Date: March 20, 2005

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