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This article is going to be an overview regarding debt consolidation loans to help you determine if the loan is right for you. A debt consolidation loan is a little different than a mortgage. A debt consolidation loan may have collateral towards the loan or it may be an unsecured loan. An unsecured loan means there is no collateral in the event that you default. You will also find that the unsecured loan offers a higher interest rate than the secured loans like mortgages because of the higher risk you pose to the lender.

With debt consolidation loans you have a goal. You want to ease your financial strain, reduce your stress, and gain a better monthly payment. There are a couple of ways you can do all three with debt consolidation loans. The first thing you want to do is be smart. Any debt that you owe, which charges a small interest rate or has no interest rate should not be included in the debt consolidation loan. You also want to check your different options. You may find refinancing your mortgage into a debt consolidation loan offers a lower interest rate than the straight debt consolidation loan without collateral. In fact this can almost be a guaranteed statement. You aim is a lower interest rate on high debt loans such as credit cards, mortgages, home equity loans, personal loans, and car loans.

When you seek debt consolidation loans through a lender you need to make sure the interest rate they offer you is lower than your other debts. For instance if you can get a debt consolidation loan for 12%, but your mortgage is at 6.5% you may find upon doing a calculation that you are not saving enough money to make the change in loans worth it. You may also find that any credit card, car loan, or personal loan that is above 12% can be rolled into a debt consolidation loan and save you money. Even if you can't get your expenses per month down to one low monthly payment, combining three or four high interest loans into one lower monthly payment and less interest is actually going to save you more money, than continuing as you are.

It is always better to reduce some of the stress and financial strain. Whenever you decide to obtain a debt consolidation loan you need to make sure you are gaining the better end of the deal, by doing several calculations regarding your finances.