Slash Your Monthly Payments And Take Control With Debt Consolidation

Debt consolidation is the process of combining all of your unpaid debt into one, so that you can make one monthly payment. If you have had good advice and made the right decisions, the amount you have to pay each month should be reduced. Consolidated debt can consist of any unpaid bills but the big items are usually credit card balances and loans.

What steps do I need to take to start this process?

The first step is to document all of the debt that you have and make a note of the typical monthly payments and interest rates that you are paying for that debt. Next you need to find a qualified credit counselor. To find someone suitable, get in touch with the National Foundation for Credit Counselling. A good credit counselor can save you money and will always act in your interest to secure the lowest possible monthly payment.

What type of loan options will be open to me?

There are two different types of loan that will enable you to consolidate your debt:

Unsecured loan - if your credit score if good you can take an unsecured loan. This unsecured loan can then be used to pay off all of your other debt leaving you with one loan a month to pay.

Secured loan - a secured loan is a loan that is taken against the value of something else. The security you offer could be a loan against the equity in your house, against funds in a savings account or even against the value of your car. If you take a secured loan keep in mind that if you can’t make the payment the bank will have the right to take your home, repossess your vehicle or divert funds from your savings account. If you are sure that the monthly payments will not be a problem then a secured loan is the cheaper loan option because the interest rate is usually more favorable.