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Digital News Report – You have went through the process of trying to lower your monthly payments, you have budgeted and your are still coming up short to pay the minimum monthly payments on your credit card balances. One way to lower your monthly credit card payments is to consolidate your debt into one loan.
This is called a debt consolidation loan which usually takes a home equity loan out to pay off the unsecured debts that you want to consolidate into one loan payment. This can lower the monthly payment considerably and make the debt more manageable.
Things you will want to know when you get a debt consolidation loan is if it is a secured or an unsecured loan. A secured loan can be tied to either a car, or a home. If you don’t make the payments you can loose your home or car. If you can get a personal loan that is unsecured to complete the debt consolidation it may be unsecured. The unsecured loan if you fail to pay it back will not cause you to lose your home. It really depends on your credit rating as well as the amount that you owe on your credit cards which will determine the kind of debt consolidation loan that you would qualify for. There often is up front points that can add to the cost of the debt consolidation loan and you should watch out for how much this will be.
With the debt consolidation loan you can often lower your interest rate considerably, and you can often times get a fixed interest rate. This can help speed up the road to paying of your debts because you won’t be paying as much in interest every month.
Another benefit to having a home equity debt consolidation loan is that you can deduct the interest off on your taxes.
Is debt consolidation the only solution, the answer is no, you can get out of debt a few different ways and you should investigate all your options before deciding to complete a debt consolidation loan. The benefit to doing debt consolidation is that it may help to simplify the repayment of your credit card balances with lower interest rates and it will very likely reduce your monthly payment considerably.
By: Victoria Brown