Numerous loans presents numerous problems like missed installments
, higher average interest rate and so on. But by compiling small loans into one single loan helps the borrower in many ways like the maintenance of loan becomes comfortable and the rate of interest of the single loan is less than the average of all the interest rates. This compilation of debt is termed as debt consolidation and loans for debt consolidation is called debt consolidation loan.
Debt consolidation loans are broadly classified into two categories secured debt consolidation loan and unsecured debt consolidation loan. Unsecured debt consolidation like all unsecured loans do not require any collateral while secured consolidation loan like every secured loan requires collateral as security. The secured nature of the latter is responsible for low interest rates and is suitable for homeowners. On the other hand unsecured Debt consolidation loans are associated with relatively higher rate of interest and is suitable for tenants, students and people who do not wants to risk their asset. Loan amount can be up to 100,000 with a loan term that can stretch as long as 25 years.
Debt consolidation loan is very popular among people with bad credits. These are termed as bad credit debt consolidation loans and help them in many fields like lower interest rate than the average rate of all the loans and a chance to improve your credit rating by timely repayments. These bad credits include CCJ, bankruptcy, IVA, arrears or missed payments and are eligible for loan. But due to fact that there is high risk involved the rate of interest or APR (annual percentage rate) is high. This bad credit debt consolidation loan is hence pretty useful.
There are numerous debt consolidation loan deals that available in the market and on the internet. The potential burrower can compare all these available deals. And after comparing the deals the borrower can choose the best deal that is offered to him. This deal should satisfy all the needs and wishes of the borrower.