Remortgqaes And Secured Loans When Used As Debt Consolidation Loans
Many people know the words debt consolidation
, consolidation, consolidation loans and debt consolidation loans, but are uncertain as to the exact meaning of these terms.
When they hear the words debt consolidation, or read about it in the press, it sounds like a good idea.
Firstly, these terms mean more or less the same thing when applied to finances, and they are in fact of great benefit to many, as the advertisements seem to suggest.
The very words themselves show what they in fact nmean.
Debt obviously refers to money that is owed, and it also seems to suggest that the money owed has become some what of a burden to someone.
Consolidation in the term debt consolidation, or debt consolidation loans, is the consolidating, that is the the combining of various items into the one.
When we combine the two words of consolidation and debt, it becomes obvious that it means lumping many bits and bobs of debts into a single entity.
When someone takes on too many debts in credit cards, personal loans, hire purchase, homeimprovement loans, etc.Debts become a nightmare and are almost impossible to deal with, and it sometimes makes little difference whethr the borrower can afford the loans, etc. or not.
It is only too easy to get into debt, and sometimes in the past few years, when many saw their working hours cut due to their companies cutting back on the overtime hours of their staff to enable them to come out at the other end of the credit crisis still trading.
As such, with less income coming into the home, many were forced to use credit cards to survive, to pay for the essentials of life such as heating, food and clothes for their back.
Others do take on more personal loans, credit cards, etc. Many people seem to view their debts in isolation and do not seem to understand how they all mount up.
It is for all these people that debt consolidation becomes like a saviour, because as already stated, debt consolidation rolls up all the other debts into the one payment, saving money and making finances easier to manage
Credit cards have interest rates of rarely less than 20%, and can frequently be a lot higher than this at up to 40% APR, while home improvement loans, arranged by the firm undertaking the improvements, normally have rates of about 25% which is very expensive.
Debt consolidation, arranged either by a remortgage or a secured loan for homeowners, cost from less than 2% and around 9% respectively, and as such afford massive sacvings on a monthly basis.
Both remortgages and secured loans are homeowner loans secured on the equity of a property, and they make excellent consolidation loans that pay off all the high interest debts and leave one neat tidy low interest repayment instead.
by: Liz Moir
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