Personal Loans Consolidation
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UPDATED: Jan 13, 2012
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Overburdened with multiple loans? When a borrower has several loans demanding payment at different times of the month, juggling that kind of responsibility can become not only difficult, but downright unmanageable. To further complicate the matter, different interest rates can force a borrower to pay more attention to certain loans and risk default on others. But fortunately, borrowers have a tool to combat being showered with a barrage of payments from multiple sources. That tool is a consolidation loan.
[loansform]Consolidation loans funnel existing debt into a single, manageable form of financing that a borrower needs only make one payment per month in order to satisfy the debt on all lines of credit.
This type of financing doesn’t need to be secured by assets, such as car titles, paychecks, or home equity, so their rates do tend to be higher than other types of loans—but by alleviating that risk of a borrower losing their collateral, consolidation loans serve as an excellent step to help lift oneself out of a debt trap.
Due to the higher interest rate, the decision to take out an additional loan to consolidate existing debt shouldn’t be taken lightly. Rather, this kind of financing should be used to force all existing payments into a single, manageable payment. This form of personal borrowing allows borrowers to pay off credit card bills, student, compounding payday, and multiple personal loans.
Since using collateral is optional, borrowers would be wise to obtain multiple quotes from different sources, as the form above will yield. That way they can be sure they’re receiving the best rate offered, and can successfully jump on the right track towards satisfying their debts.