What is ‘Debt Consolidation’?

Debt consolidation means obtaining a new loan to pay off a number liabilities and consumer debts generally unsecured ones. In effect, multiple debts are effectively combined together into one single loan with one monthly payment usually with more favorable payoff terms and lower interest rates. This type of loan is referred to as a consolidation loan.

Finding a Debt Consolidation Loan

You can contact a bank, credit union or a financial company to approve a consolidation loan to help you pay off debts, but you should have a good credit history to meet their lending requirements. To secure and maintain a debt consolidation loan from a bank or credit union you will pay fees in the form of interest and loan origination charges. There are two broad types of debt consolidation loans secured and unsecured.

Secured Debt Consolidation Loan

A secured debt consolidation loan is a loan where the owner pledges an asset like property or car as security to the lender. So if you own assets like a home, land or a car with equity you have the option of taking a home equity loan or a homeowner equity line of credit(HE LOC) using the asset as collateral. This type of loan is usually a low-cost loan that is fast and easy to acquire. Obtaining such a loan is more in line with your budget as it consolidates all your payments into a single monthly payment.

This type of loan no doubt sounds attractive as it is the best way to get rid of your debts and maintain your credit score but in reality, it is not a good decision. You are pledging your property as collateral by using a home equity loan or a line of credit which can jeopardize your property if you fail to make the required payments in time.

Unsecured Debt Consolidation Loan

If you do not have a home, property or a car the alternative would be to get an unsecured consolidated loan. It is called an unsecured loan because it does not require you to use an asset or collateral to secure it. Unsecured loans typically have very high rates of interest than secured debt consolidated loans as the lender is taking on more risk. Even so, the rates are fixed and are still typically lower than the interest rates on credit cards. It can be more difficult to get, if you are already having problems with heavy debt.

Debt Consolidation Program – How it Works

Secured or unsecured debt consolidation loan is a very good option if you have the potential of meeting the requirements of acquiring such a loan. This type of loan does not erase the original amount but transfers all your loans to a different type of loan.

If you are in need of a solution to your debt problems it may be best to look for a debt settlement or debt consolidation program at Royal Debt Relief.

The first step to getting started for your debt consolidation program is online credit counseling to see if you qualify and help identify the root cause of your financial problems. Our credit counselor will recommend a debt management plan tailored to your financial situation, based on your income, assets, and budget.

Once the debt consolidation plan has been worked out our experienced counselor will work with you hand in hand and provide you with additional education, guidance, and motivation so that you stick to your plan and pay off your debts.

Our debt management team will negotiate with your creditors and get you a single affordable monthly payment. It will not only reduce your interest rates but also waive penalties and help you to pay off your debt faster. It also provides bill consolidation-all without a loan.

RDR Debt Consolidation Program is designed to help you get out of debt from 24 – 48 months, paying less than you would if you continued on your own or even opted for a debt consolidation loan.