Consildating debt

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Also, determine if you are paying off a secured or unsecured debt.Consolidation loans are geared toward unsecured debt (credit cards, medical bills, utility or rent payments) rather than secured debts (home or auto) that have collateral behind them.

From starting a budget to educational programs on money management, counselors discuss your entire financial situation and help you develop a personalized plan.It merely pays off your existing debts with a new loan, which must also be repaid.Essentially, you are replacing many loans with one, hopefully at an improved interest rate and monthly payment amount.Unsecured loans are not tied to an asset and are based largely on your credit history because you are considered high-risk for a lender.Easier to obtain from a lender Higher borrowing amount allotted Lower interest rate Possible tax deductible interest rate– Longer repayment terms (higher cost in interest over time)– Risk of losing assets No asset risk Shorter repayment term (lower cost in interest over time)– Harder to obtain from a lender (high risk borrower)– Lower borrowing amount allotted– Higher interest rate– No tax benefit The easiest type of consolidation loan might be a 0% interest credit card balance transfer.Consolidation loans can be a worthwhile solution for consumers with heavy debt that is dispersed amongst multiple credit cards.

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