Debt Consolidation means combining several unsecured debts, such as credit cards, medical bills, personal loans, etc., into one debt bill and paying all of them with a single loan. Debt consolidation is nothing more than a 'con' because you think you have done something about the debt problem but debt4 is still there.
The main advantage is that instead of writing many checks to creditors every month, you combine bills into one payment, and write one check. This helps in eliminating mistakes that result in penalties like incorrect amount or late payments. This process can result into a lower overall interest rate to the entire debt load and provide the convenience of servicing only one loan.
Anyone with a good credit score could qualify for a debt consolidation loan. If you do not have a good credit score, then it will be difficult for you to get the loan or whether you have to pay additional interest rate to get debt consolidation loan.
Types of Loans5 which can be considered under debt consolidation are
1. House Loans
2. Education loans
3. Personal loans
4. Vehicle loans
5. Credit cards
6. Small Business loans and many more.