What Are Debt Consolidation Loans?
This is common among consumers with credit problems (maxed-out credit cards, store cards, car loans, personal loans, etc.), who combine all their debts into one loan to create greater ease in repayment.
A debt consolidation loan is basically a way to add all your loans into your bond, and repay them all in one monthly repayment. In other words, they all become part of your mortgage bond.
1. Say you have a bond, credit cards, a car loan and a personal loan.
2. See the illustration below and you’ll find that if you could add your credit cards, personal loan and car loan into your bond, you would save money because your interest rate would be much lower – 12.5% for all of it! *12.5% has been used for illustrative purposes only.
3. And that is really all a consolidation loan is. All your monthly repayments go into one, and the total you pay every month goes down.
4. The total can go down a lot, as you can see from the illustration. Also, it’s convenient – one payment, not several, every month.
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October 19th, 2009 at 7:38 am
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