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Tuesday, April 26, 2011

Debt Consolidation Loans – a Stable Solution for Wobbly Finances

In the past couple of years, there has been a considerable increase in the number of people seeking debt advice and deals. With monetary liabilities reaching an exorbitant level, the British have emerged as the biggest borrowers in the World. In fact, one study indicates that through credit cards, mortgages and other loans, the UK people have racked up combined debts close to a trillion pounds. Furthermore, quite a few of them are families who are spending more than 50% of their annual income on debt repayments.

So, what compels people to take multiple loans and get into multiple debts? Well, the reasons are many – the rising cost of living and changing business trends, lifestyle necessities and demands, bad decisions and mismanagement of funds, etc. We all know that with multiple payback schedules, the possibility of missing one or more repayments is high. Hence, managing several debts is not easy... One needs to be very vigilant to elude the possibility of a default.

This calls for an organised and efficient plan like debt consolidation, which is an efficient way to rearrange messed-up finances and bring them back on track. The credit bazaar offers a dexterous way to consolidate multiple arrears – consolidation loans. These loans help loan seekers to pay off all their debts in one go… Hence, they are perfect for people who are looking for a plan to pay off compound debts easily and become debt-free ASAP.

Debt consolidation loans reduce their overall pressure by:

Merging multiple monthly payments into a single payment

Compressing varying monthly interest rates into one interest rate

Not having to deal with diverse payback plans and multiple lenders

Please note: Debt consolidation loans fuses the overall financial pressure but may not reduce the overall payback amount, as the success of availing it depends on the type of loans one consolidates. It is the most effective solution for financial products with heavy interest rates.

For example, the consolidation of multiple credit card debts will always prove to be cheaper, as credit cards have high interest rates. Also, try to choose a deal that reduces the overall loan price and payback period as compared to the existing debts.

The sub-types of consolidation loans are:

Secured consolidation loans: Are ideal for homeowners and property owners, as they require collateral against the loan amount. Presence of collateral means low APR and negotiable pay back terms and loan clauses. Hence, they are best suited for clearing larger debts.

Unsecured consolidation loans: Are ideal for all (tenants, homeowners, property owners and people living with their parents like students), as they do not require collateral against the loan amount. Absence of collateral means high APR and virtually non-negotiable payback terms and loans conditions. Hence, they are best suited for clearing smaller debts.

The aim of debt consolidation loans is to help people along the road to a better financial status. So, choose wisely and keep up with the payments on the consolidation loan to obtain a good credit rating.

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