Debt Consolidation In A Nutshell
The method of combing loans that were availed from multiple lending institutions like banks into a single loan preferably for a lower rate of interest is known as debt consolidation. This is the best solution a person can opt when he or she finds that they are unable to manage to repay many high interest loans. Debt Consolidation loans can be broadly split into Secured debt consolidation loans and Unsecured debt consolidation loans. In a secured type the borrower has to pledge some collateral thus reducing the lenders risk exposure. An Unsecured debt consolidation loan is offered purely based on the income earned by the borrower and since the risk exposure is high the lender usually charges a slightly higher rate of interest when compared to a secured loan. Both have fixed repayment tenure.
