Get a debt consolidation loan and manage your money

Posted on May 19, 2008 - Filed Under Finance |

Debt Consolidation Loan is the most common and
the most sought after debt relief option. To put it in simpler terms, it means
obtaining a big loan, to pay off all the other remaining loans.

Debt Consolidation Loan is the most common and the most
sought after debt relief option. To put it in simpler terms, it means obtaining
a big loan, to pay off all the other remaining loans. Debt consolidation loan
is often accompanied by lower monthly payments and longer repayment period.

There are two types of consolidation loans- secured and
unsecured. The most commonly used type of loan is the secured debt
consolidation loan that uses something of a significant value as a security.
Most of the borrowers keep their houses as a security with the lenders. Secured
loans are less risky for lenders and that’s the reason why they offer a lower
rate of interest to the borrower on the loan amount. 

The unsecured debt consolidation can be availed without
placing any asset as collateral. Usually the interest rates charged on the loan
is high. Another disadvantage is the restriction placed on the amount of loan
that is available for borrowing. Unsecured loan is the best option for the
individuals who live with their parents or the tenants or people who have no
legal title over any property.

Nowadays, consumers have a wide range of options to select
debt consolidation service providers. So, shop around to find a program that is
in sync with your needs. Local credit unions and the banks you already have a
business with are a good place to start. These are reliable sources and in all
probabilities you are likely to get a fair deal.

One must be extremely careful while selecting a debt
consolidation provider. There are many con artists out there who run
fly-by-night agencies, such agencies ask up front payment from the consumers
and run away with the money. Thus, it is advisable to keep your eyes open and
be aware of the laws. The law in this case says that in U.S.
and Canada it
is illegal for any debt consolidation provider to call you and promise you a
loan and later on ask for a hefty up front fee even before providing any
service. 

You should be wary of the organizations that advertise
themselves as non profit debt consolidation agencies. The FTC has penalized several
so-called non-profits, which were funneling funds to a for-profit agency.

You should investigate the debt consolidation agencies that
claim that they can remove all your negative information that are accurate from
your credit report but they want you to apply for your credit report and send a
copy to them. 

Some services promise not only to consolidate debts but also
offer insurance and other investments at the same time. They will offer you
reduced monthly payment on a condition that you have to buy insurance or mutual
funds from them. You should stay away from such services.

Thus , it is advisable to do a proper research work before
zeroing in on a debt consolidation provider. Look up companies at your State
Attorney General’s office and also with the Better Business Bureau (BBB).

About the author

This article has been written by Jason Holmes, a community
writer of Debt Consolidation Care. She has gained a vast knowledge on debt
consolidation process over the years. She has also been writing on debt
settlement, debt consolidation, credit card debt, debt consolidation loan and
various other financial aspects.

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