Copyright (c) 2010 Andre van der PoelDebt Consolidation Explained.Debt Consolidation is where you take all your smaller debts and pay them off with one big loan so that you only have one installment to pay at the end of the month. Paying one lower monthly installment to cover all your debt is what Debt Consolidation is all about. The benefit of taking out a Debt Consolidation Loan should purely be to save on interest charges and repay a lower monthly premium than before. Always remember to compare your current situation with the one you might be getting yourself into. A secured Debt Consolidation Loan is credit provided against an asset such as your home loan, and an unsecured Consolidation Loan is where credit is extended to you without having any surety such as a home loan. Debt consolidation via an unsecured loan, or personal loan. This product is for the consumer without a secured asset, or low affordability. Debt consolidation with a personal loan can be beneficial if, as warned above, the interest isn't higher than the debts you are going to settle. These unsecured consolidation loans are normally payable in 60 months. Also, this loan should work out to a smaller repayment per month than the smaller debts would have, for it to be beneficial. Debt consolidation via a secured loan or home loan. Home owners have the advantage of using the equity in their property to consolidate debt. A second or third extension on your bond is a way of achieving this, if there is enough value in your property. Reckless credit by the banks, have prompted the National Credit Regulator to control and regulate the methods the banks use to issue credit to consumers. Each and every loan application is considered individually by the banks. A bad credit record is not the deciding factor for a few credit providers, and they will assist depending on affordability and spending habits. In many cases, it is advisable for consumers to first go through a process of credit repair before they apply for consolidation loans. Bond interest is, at time of writing, 10.5%, which is the lowest interest you can get. It's obvious that when doing debt consolidation into your bond your monthly installments will be much lower than individual debts like personal loans, accounts and credit cards.Most banks are looking for security when lending money out. Therefore the banks prefer you to have a good loan to value ratio(LTV), and a good repayment affordability.
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