(from Goarticles.com)
Debt Consolidation is a service that allows you to take a low interest rate loan to pay off your accumulative debt.It is the best option to get rid of your debts.Debt consolidation services helps to relieve the burden of high monthly payments on credit cards and other types of unsecured debt.Most of people discover that higher balances direct to higher interest rates until they can no longer pay for the debt they have mounted up.Debt Consolidation can be said as a credit creation facility that is utilized to pay off earlier debts of the borrower along with interest.In this type of service,borrower indeed borrows a loan,to pay off all previous loans and debts.
The borrower returns the consolidation loan together with interest.Because of multiple loan borrowing like car loan and a home loan,many a times the borrower is in debt to several lenders.The borrower is not obliged and loaded by many loans for a very long time in order that the consolidation loan is used to pay off all these multiple borrowings. The debt consolidation loan can be secured or non secured loan.Borrower has to pledge some precious asset to the lender in case of a secured loan. Usually,many lenders like better to secure debt consolidation loan with an asset.There is very rare case of non secured consolidation loan. If this case occurs,they have to secure source of high income or is supported by a guarantee.It is very tough to come by the debt consolidation loan. Before availing this facility,many strict laws,rules and regulations are followed by the banking and finance organizations.
Very few lenders like to compute the total cost of previous debts and the interests charged on them.After that,the lenders calculate the amount of credit that they are willing to offer and then quote the amount along with the interest to the applicant.The credit history of the applicant is examined by the lenders at the time of the process of sanctioning.They will also keep information about applicant's bank and credit card companies.The first relative's credit history is also taken into consideration,if the applicant is married or has children.In such case,the rate of interest is low and time period will be long,which helps the borrower to repay the loan.
4 comments:
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