Just Say No

Debt consolidation is often advisable in theory when someone is paying credit card debt. Credit cards can carry a much larger interest rate than even an unsecured loan from a bank. Debtors with property such as a home or car may get a lower rate through a secured loan using their property as collateral. Then the total interest and the total cash flow paid towards the debt is lower allowing the debt to be paid off sooner, incurring less interest.

In U.S debt consolidation has been introduced into the system. Very few banks have come out with such a ready made product. A borrower can always talk to her/his bank to work out a solution. The obvious things that a lender will run a check on in this situation are: your credit history, your loan repayment record, your income and expenditure per month etc. In short, a lender bank will go through all those variables that they check while sanctioning your home loan or any other retail loan.

The advantages of Debt consolidation is that debt consolidation loan unifies all the debts of the borrower that one owes to various lenders and pays all of them with a lump sum payment. Now the borrower has only one loan to repay which is the debt consolidation loan.