Income Tax Rates

Bills, loans, fees and expenses that exceed your earnings will regularly front you into debt. You try hard to repay these loans and bills, but in the end, you commonly end taking second loans with the expect of layer these loans. Eventually, the only selection you mostly have falsehood in seeking the help of economic advisers like those found in debt consolidation companies and debt settlement companies.

A debt consolidation loan is a loan which is meant to cover all the debt that you have. All the loans and credit card debts that you have are merged into this one debt that loan. The advantage of a debt consolidation loan is that instead of paying off all the individual creditors you have, you just have to make a single payment to the debt consolidation company every month.

Once the payment has been made to the debt consolidation company, it then falls to the debt consolidation company to now make the many payments to one?s many creditors. As a result, one no longer has to worry about payment being made because they have the peace of mind of knowing that the debt consolidation company has taken care of it.

There are basically two types of debt consolidation loans; secured and unsecured debt consolidation loan. With the secured debt consolidation loan, you are furnish with the debt consolidation loan only if you furnish some collateral for the amount borrowed. This collateral can be any asset of yours home, bank account or car. With the secured debt consolidation loan, you can borrow as much as you need as the debt consolidation company will sanction the money to you as you provide them collateral.

So what happens if one doesn't pay a secured debt consolidation loan? If by the end of the loan term the loan is not paid off, then the debt consolidation company can seize one's collateral. However in exchange for this collateral, one usually gets a lower interest rate and higher loan amount than an unsecured loan would.

As the name implies, in an unsecured debt consolidation loan, there is no security for the loan. As there is no collateral here, the interest rate for this loan is used to on the higher side, and very often, the debt consolidation company doesn't sanction the exact money you apply for. They used to allot an amount lower than what you ask for so that there is not that much loss if you fail to repay their money. This is also why they also charge higher interest rates, so that they receive many money every month, and work their way in covering the principal amount they provide you as a loan.

So evidently an unsecured debt consolidation loan is comparatively safer than an available debt consolidation loan. Though you may not get the amount of money that is wanted to repay your loans, you don't have to concern of down your house or car in project you crash to repay the debt consolidation loan.