Debt Consolidation Explanation
With today’s economy, it’s no wonder so many people are in over their heads in debt. It’s such a sickening feeling when the phone rings and you just know that it’s probably another debt collector calling for money that you simply haven’t got at this time. It’s not that you don’t want to pay off your bills, it’s just that you don’t have the money at this time.You figure how can you pay a credit card bill when you hardly have enough to pay the electricity and get groceries this month. Don’t lose hope though as there is a solution to your problems.
In cases like this, and there are many cases surprisingly similar to the above, consumers are turning to debt consolidation as a way to handle their existing debt and free up cash to live on. All of your debts are rolled into one big loan payment and usually the loan payment is less than what you owe on your minimum monthly payments of the individual bills. This will end the harassing calls and help you re-build your credit.
By setting up a debt consolidation loan, you are able to finally pay off all those pesky bills that have been sitting there with you making minimum payments or none at all. Additionally, the interest rates are adding high fees to your credit card statements each month that they go unpaid or they only receive a minimum payment. In most cases, the loan you receive to pay off your bills will have a lower interest rate than you ever would have had with credit cards.
With consolidation loans, you typically have one secured loan that has something large, like a house, as the collateral that secures it. In some cases, it could be a series of loans that all have fixed interest rates for the consumer so that they don’t have to worry about rising rates and varied monthly payments. It’s advised that consumers shop around for debt consolidation loans as these companies that offer the loans operate under different rules and offer different interest rates based on credit scores among other things.