What is a Debt Consolidation Loan ?

What is a Debt Consolidation Loan ?

It is all too easy to get into debt.  There are hundreds of different debt providers that we don’t even think of as running up debt, never mind the obvious.  With the plethora of credit cards, loans, mortgages, mobile phone contracts, in store cards, car credit and much more besides it is no wonder that people are slowly coming under more and more debt.

With debt in numerous places even making the minimum payments can be difficult and expensive.  Which is why more and more people are turning to debt consolidation loans to help them get out of trouble.

But what are debt consolidation loans and how they can help?

Debt Consolidation Loans

A debt consolidation loan is, as the name suggests, a loan that helps you consolidate all your debt.  It does this by giving you a loan for the amount of your debt, which you then use to pay off all your other debts. For those with a bad credit record there are options for consolidating your debt rather than using loans for bad credit situations, such as guarantor loans if you have a parent or other family member with a good credit history willing to guarantee the repayments should you fail to be able to make them.

For many this is a big help as it can stop debt collectors calling, stop the demand letters coming through the door and it can stop the pressure that many people feel from being under so much debt.

Once the debts are paid off with the other companies it leaves you with just the one loan.  This helps you ensure that the minimum payments are affordable (though obviously you can pay more as and when you wish) and it also ensures that you are far less likely to forget to make the payment – 1 payment is easier to remember than 10!

It also stops all the penalty charges that you get for missed and late payments with debt and credit companies, and puts an end to the ‘punishment’ that your credit rating is getting – using such a loan can build your credit up after years of watching it drop.

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