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By Natasha Anderson
Having numerous debts always put a bad affect on the credit report which further hampers the credit score. Can you imagine a source in which you can pay off your debts and simultaneously can save a sum of money? I know it’s very difficult to imagine such a source but it is true that there is such source which is provided by the financial market. This source is known as debt consolidation.
In order to explain debt consolidation in a better way, firstly there is a need to understand the concept. Debt consolidation combines all the debts and leaves the borrower with single monthly payment rather than paying number of debts. The lender of the debt consolidation pays all the debts on behalf of the borrower to the creditors.
Usually, interest rate varies from person to person. Debt consolidation carries low interest rate as compared to rates prevailing on the debts. In such way the borrower is also able to save money and time.
Debt consolidation simplifies the payment structure of the debt payment. In other words, the borrower is only required to make single monthly payment rather than making multiple payments to the creditors.
Debt consolidation can be availed by using or placing equity of an asset as collateral against the loan amount. This enables the borrower to avail debt consolidation on competitive rates. On the other side of the coin, the debt consolidation can also be availed without placing any collateral but in such mode the borrower is required to pay bit high interest rate. Along with that, in unsecured debt consolidation there is always a need to provide a proof that the borrower can easily meet all the repayments that is there must be regular flow of income.
However, the credit score of the borrower doesn’t affect while availing debt consolidation. But, good credit score is always offered with low interest rate. Even a bad credit scorer can also avail debt consolidation on competitive rates which is only possible through co-signer. Co-signer is the person having good credit score and the borrower with bad credit score takes the advantage of the good credit score of that co-signer. Co-signer act as assurance to the lender that if the borrower fails to meet repayments then he will be held liable to meet all the repayments. In such way, bad credit scorer can avail debt consolidation on competitive rates.
Eventually, debt consolidation will solve all, your debt problem and will also helps in that you are not trapped in debts again.
About the Author: Natasha Anderson works for the UK Debt Consolidations. To find Debt consolidation, Debt consolidation, Business debt management, Loans, Unsecured debt consolidation loans, Secured loans that best suits your needs visit ukdebtconsolidations.co.uk .
Source: isnare.com
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