Debt Consolidation: BE DEBT FREE--The different ways to consolidate your debts

A debt consolidation loan is a loan taken to consolidate a number of loans into one manageable loan. A debt consolidation loan can also help you in reducing the cost of your total debt as it usually carries a lower rate of interest than other loans, such as personal loans, credit cards, car loans, etc. A debt consolidation loan with an extended loan period can reduce the amount of your monthly loan repayments.

Thus, there are three main objectives of debt consolidation:

· To consolidate a number of loans into one manageable loan.
· To reduce the cost of debt.
· To reduce the amount of monthly loan repayments.

You may avail different types of loans to consolidate your debt:

Secured Loans

Debt consolidation through secured loans is a logical thing to do since secured loans carry low rates of interest and one of the objectives of debt consolidation is to reduce the cost of debt. However, you must be very careful while consolidating your debt through secured loans since it puts your property at the risk of repossession in case of repeated defaults in repayment on your part.

Unsecured Loans

You may also consolidate your debt through unsecured loans. However, before availing an unsecured loan to consolidate your debt, make sure that it does not carry a very high rate of interest otherwise the very objective of reducing the cost of debt will be defeated.

Home Equity Loan

Home equity loan is a type of secured loan. Home equity is the value left in a house after subtracting the unpaid mortgage balance from the current value of the house. A home equity loan is a second mortgage, which is taken against a house that is already mortgaged.

Low Interest Credit Cards

You can also reduce your debt burden by availing a new credit card that charges a lower rate of interest than your existing credit cards. If you use a low interest credit card to repay your earlier credit card dues, it will greatly reduce your debt burden. This can be even more beneficial when the new credit card offers 0% interest credit if it is repaid within a stipulated time.

A Guide to Free Debt Consolidation

Debt consolidation is becoming an increasingly popular debt management tool used to help people get a handle on their debts. The principle of debt consolidation is simple: take out one low cost debt consolidation loan to pay-off all of your creditors, leaving you to handle just one loan repayment amount per month at a manageable rate to suit your finances.

Free debt consolidation advice is available from a variety of sources, including the Internet. Finding free debt consolidation advice specific to your circumstances though is not always easy, with some free debt consolidation sources giving apparently contradictory advice on debt consolidation matters. But, regardless of the approach you take to debt consolidation there are some basic rules that we should all follow to insure that the debt consolidation product we end up with is right for our situation.

Free debt consolidation advice

Free consolidation tip #1

Add up your debt: Before jumping headlong into a debt consolidation program you'll first need to work out what the total sum of your debt amounts too. Check the outstanding balances of all your credit cards, store cards, finance agreements and even your bank overdraft. For the purpose of debt consolidation do not include your mortgage.

Free consolidation tip #2

APR: Find out the APR that you are currently paying on your various debts. This will give you an idea of the amount of interest that you are paying on each part of your debt. If you add the APRs together and divide by the number of different credit cards, store cards etc. on which you have an outstanding debt then you will come up with the average APR that you are being charged. Don't be surprised if this is 15% or more.

Free consolidation tip #3

Work out your income vs. expenditure: Make a personal income vs. expenditure budget. This should include a column showing all money coming into your household on a monthly basis and another column showing all expenses that are going out each month. You'll need to factor in new purchases on credit cards, store cards, as well as all of your direct debits and monthly, quarterly and annual bills. Ignore current interest paid out on outstanding debt balances.

Free consolidation tip #4

Analysis expenses: Consider each of your expenses in turn, and ask yourself if you can reduce the cost of this expense.

The Basics of Student Loan Debt Consolidation

You can combine several of your student or parent loans into a single student loan Secured Debt Consolidation Loan. You can consolidate your federal student loans too, but make sure that you do not consolidate both your federal student loans and private student loans into a single student loan debt consolidation program. Just as other debt consolidation loans, you must make your student loan debt consolidation payments to a single lender, who further disburses to your old creditors.

You can combine several of your student or parent loans into a single student loan debt consolidation. You can consolidate your federal student loans too, but make sure that you do not consolidate both your federal student loans and private student loans into a single student loan debt consolidation program. Just as other Online Secured Loan UK, you must make your student loan debt consolidation payments to a single lender, who further disburses to your old creditors.

To go for debt consolidation of your student loans, your minimum balance should be $5,000, and you must either be in the six month grace period after your studies, or are already repaying your student loan.

Before selecting your student loan debt consolidation option, review all the advantages and the disadvantages:

• Through debt consolidation you make your student loan payments to a single lender.

• Depending on the balance of your loan amount, your consolidated student loan has an extended repayment term from 10 to 30 years.

• When negotiating with your bank or financial institutions, ensure that your phased repayment plan allows you to easily meet your monthly payments and have a good credit rating, at the same time.

• The rate of interest for student loan debt consolidation is capped at 8.25 percent for federal student loans.

• Once the rate is fixed you cannot take advantage if the interest rates fall in future.

• There are no fees charged for student loan debt consolidation.

• Once approved, you cannot undo your debt consolidation of your student loans as they have already repaid in full to your previous creditors, and they no longer exist.

You can still obtain debt consolidation for your over due, or unfulfilled, student loans if you negotiate a satisfactory repayment plan with your bank, or debt consolidation lender. Married couples, too, can consolidate their individual student loans together. This is regardless of how much each owns before consolidation, and must now agree to pay the consolidated amount.