If you’ve ever taken a debt, you would know that it is quite a headache to repay. High interest rates, long re-payment tenures, and other headaches that come with it. There are a variety of considerations one must make when making a loan.

However, a person may feel the need to shift their loan for a variety of reasons, and that’s where debt consolidation comes in, an easy way to buy yourself more time to pay back a debt, get a lower interest or shift your loan to another bank. Join us today as we take a deeper look and investigate the world of debt consolidation, what it is, how it works, types of debt consolidation, and Debt consolidation attorneys.

What is it?

Debt consolidation is the method of availing one loan to pay off others. This can be done by contacting a bank and taking a loan from them, for example – You took a car loan to buy a new vehicle and are paying its EMIs off, you also then take a home loan to purchase a house and give it on a rental basis, however, due to the prevailing conditions the house becomes a Non-Performing Asset, and you’re falling short on EMIs, in this case, you can avail another bank debt consolidation program and pay off that debt, you will now have to pay the bank from which you did the debt consolidation in more fresh and favorable terms.

Types of debt consolidation 

There are two methods by which you can avail a debt consolidation plan –

–         Secured loans – Secured loans are loans usually held against a ‘collateral,’ and collateral can be defined as an asset that is held against the loan taken; this can range from a house to a car or a property.

–         Unsecured loans – Unsecured loans are loans that generally do not have collateral; these are hard to obtain and tend to contain a higher interest rate to be paid back. However, the interest rates on both of these are lower than those that come with credit cards.

Types of lenders

There are a variety of lenders that offer debt consolidation services – 

–         Individual lenders – Peer-to-peer lenders are singular money lending entities that are not linked with any financial institutions, and these individuals offer debt consolidation services albeit at higher interest rates.

–         Financial institutions – These institutions are usually banks or financial services companies, and these offer debt consolidation services at much lower rates of interest than individual lenders. These offer two types of debt consolidation, which are – Secured and unsecured.

Benefits of debt consolidation 

– Helps in paying off multiple debts with high interest rates

– Can offer a single monthly plan with one rate of interest as compared to several different plans 

– Can offer lower interest rates and create a more advantageous offering

Requirements for debt consolidation 

The main consideration in debt consolidation is a high credit score. The higher the credit score, the higher the chance of an individual obtaining a debt consolidation loan.

Debt consolidation lawyers 

Abogados de consolidación de deuda en Miami are kinds of attorneys who help you understand debt consolidation better and also protect and represent your legal interests as an individual in court.

Debt consolidation is the best way to ensure that you are not falling behind on your payments and also ensure that if your assets are on a collateral basis, they’re not seized. If you are falling prey to high-interest rates and multiple loans, you can also take this route and get a more lenient and beneficial plan.