This amounts to a total savings of ,371.52 (,750 for payments and ,621.52 in interest).Of course, borrowers must have the income and credit worthiness necessary to allow a new lender to offer them at a lower rate.Although each lender will probably require different documentation depending on your history, the most commonly required pieces of information include a letter of employment, two months' worth of statements for each credit card or loan you wish to pay off, and letters from creditors or repayment agencies.If you have a good payment history with a bank, credit union or credit card company, asking that institution about a debt consolidation loan should be your first step.(In circumstances where you need actual debt relief or don't qualify for loans, it may be best to look into a debt settlement rather than, or in conjunction with, a debt consolidation.Debt settlement aims to reduce your obligations rather than just reducing the number of creditors.These loans are usually offered by financial institutions, such as banks and credit unions; there are also specialized debt-consolidation service companies.There are two broad types of debt consolidation loans: secured and unsecured.
More traditional, unsecured debt consolidation loans, which are not backed by assets, can be more difficult to obtain.Individuals usually work with a debt-relief organization or credit-counseling service.These organizations do not make actual loans; instead, they try to renegotiate the borrower’s current debts with creditors.) Freeman says that debt consolidation loans are most helpful for those who have multiple debts, owe ,000 or more, are receiving frequent calls or letters from collection agencies, have accounts with high interest rates or monthly payments, are having difficulty making payments or are unable to negotiate lower interest rates on loans.There are also several consolidation options available from the federal government for those with student loans.Theoretically, debt consolidation is any use of one form of financing to pay off other debts.
Debt consolidation means taking out a new loan to pay off a number of liabilities and consumer debts, generally unsecured ones.