What is a debt consolidation loan?
A Debt Consolidation Loan is used to combine all your existing consumer debt or credit card debt into a single loan and one monthly payment. The advantage of this type of debt loan is that you can consolidate your high interest credit cards, auto loan and/or student loan debt, into one single lower monthly payment. It allows you pay off bills and stop creditors from calling. It also allows you to obtain extra cash for personal needs. This type of consolidation is done by way of a Home Equity or Refinance Loan.
A debt consolidation loan is a type of home equity loan that allows you to combine several debts into one loan. By making one lower monthly payment, you can more effectively manage your debt. The key to successfully reducing your debt is to discipline yourself from new spending. If you’re consolidating credit card bills, don’t use the credit cards after you get a debt consolidation loan, even if you’ve cleared your balances. You could be tempted to overspend, which would eliminate the benefits of consolidating your debt.
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