Debt consolidation entails taking out one loan to pay off many others. This is often done to secure a lower interest rate, secure a fixed interest rate or for the convenience of servicing only one loan.
Debt consolidation can simply be from a number of unsecured loans into another unsecured loan, but more often it involves a secured loan against an asset that serves as collateral, most commonly a house. In this case, a mortgage is secured against the house. The collateralization of the loan allows a lower interest rate than without it, because by collateralizing, the asset owner agrees to allow the forced sale (foreclosure) of the asset to pay back the loan. The risk to the lender is reduced so the interest rate offered is lower. [Wikipedia]
In other words Consolidation Loan is a type of loan in which all of your eligible federal student loans or private student loans are combined into one single loan. This usually lowers your minimum monthly payment amount. Note that by extending your payments, your overall financial obligation may increase because you will be making payments (principal plus interest) for a longer period of time. Federal and private student loans must be consolidated separately. [Source]
Benefits of Debt Consolidation
1. Turn all your credit commitments into one lower affordable monthly payment.
2. Reduce what you pay in interest on credit cards, store cards, overdrafts and loans.
3. Reduce your overall monthly commitments without affecting your credit rating.
4. Know exactly when your debts will be fully repaid. [Source]
Debt Consolidation Calculators
1. Debt Consolidation Calculator – Money Central
2. Debt Consolidation Calculator – Loan Sense
3. Debt Consolidation Calculator – Bank Rate
4. Debt Consolidation Calculator – C-Point
5. Debt Consolidation Calculator – Guardian
6. Debt Consolidation Calculator – Lending Tree
Below are some of the best resources on Debt Consolidation:
1. About Debt Consolidation
This article explains features, benefits, drawbacks and many more things about Debt Consolidation.
2. Your 3 Worst Debt Consolidation Moves
This article gives bad debt-consolidation moves as well as some best debt-consolidation moves.
3. Debt Consolidation And Credit Ratings:
Does debt consolidation effects your credit rating – This is something which this post discusses here.
4. Debt Consolidation Loans Without Owning a Home:
What is Debt Consolidation?, Procuring Debt Consolidation Loans Without Owning a Home are some of the things discussed here.
5. Debt Consolidation Tips
Some of the finest Debt Consolidation Tips.
6. Tips Before Getting Debt Consolidation Loans
Another set of Debt Consolidation Tips.
7. Obtaining Effective Debt Consolidation Information That May Change Your Life
Some useful information about Debt Consolidation.
8. The Downsides to Debt Consolidation
Some of the drawbacks of Debt Consolidation which you should be aware of.
9. Debt Consolidation FAQs
Last but not the least FAQs about Debt Consolidation.
10. Be careful of what looks to be a quick fix – Debt consolidation
Debt consolidation: cure or continued credit problems?
11. 3 Ways to Eliminate Credit Card Debt, Managing Your Credit Card Debt, Paying Too High Interest? Look For Credit Card Consolidation, Using a HELOC for Credit Card Debt Consolidation, Using a Credit Card Debt Relief Company etc.
Credit Card – Debt Consolidation
12. When to Use Debt Consolidation Programs, Things to Remember About Debt Consolidation Programs, How to Find the Best Debt Consolidation Programs
Debt Consolidation Programs – Overview of Debt Consolidation Programs