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What is debt consolidation?

July 27, 2011

Debt consolidation in simple terms is having all your debts from one lender as oppose to multiple lenders at the same time. To consolidate your debts, all you need to do is look for lenders, often bigger banks, that offer consolidation programs and borrow money from them. You need to shop around for the best debt consolidation deal. However by using any consolidation program you are much better off than having debts from all over the place. First of all you have only one debt to pay for. If you owe 2000 dollars from various lenders before, you can now have a 2000 loan from just one single bank. Although the amount of debt is still the same as before, managing them is much simpler, and the likelihood that you forget a payment is rather low. Debt consolidation programs often offer cheaper rates than other credit products, by consolidating your debts you have essentially reduced the cost of your debts. And the best thing is that you are not dealing with non bank lenders any more after the switch.

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From → Money

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