What is Debt Consolidation Loans?

Whenever our debts pile up and we struggle to repay them on schedule we can turn to debt consolidation loans as a means of getting out of bad debts and getting a better credit score. Such loans help us to consolidate all our outstanding debts under one umbrella and thus reduce the burden of different EMIs and higher interest rates. Such renegotiated debt consolidation plans mostly offer reduced interest rates and simplified monthly payments. In Canada many chartered banks and private banks offer such consolidation or refinancing loans. If one has property that can be used as collateral then the terms are very favorable as secured loans normally attract a much lower rate of interest than unsecured ones. Some banks go to the extent of offering the best possible rates in the market or $500 bonus if proved otherwise!

So there is no need and no excuse for reeling under a mountain of debts and defaulting on repayments thereby getting a poor FICO score. There are enough banks online offering debt consolidation loans to people even with bad credit history as a way of helping them and retaining their custom for future benefits. In today’s digital world where everything is available online in an instant, there are financial institutions offering to process your loan in under five minutes if your documents are in order.

If one has some property or house that can be mortgaged, then it can fetch the most competitive loans as more banks vie with each other to offer the best possible rates for secured loans and home equity mortgages. Also private mortgage brokers can try and get the best rates from mortgage lenders to home owners as they are more confident in lending to people with homes or other property that can be put up as collateral. In Canada, as many banks are eager to retain and help their customers, they offer very competitive rates on second mortgages, at times even reducing the monthly payment by up to 75% in some rare cases.

It is very much advisable for people to go for debt consolidation loans rather than pay exorbitant interest on their credit card dues. People generally do not realize that credit card companies earn up to three times more as interest by setting a low minimum payable amount every month thereby encouraging the customer to perpetuate the dues and hence earn steady interest on the same. Contrary to popular belief, debt consolidation can be done without incurring heavy fees for the service, especially if the customer has property so that the loan is secured. For instance, Ontario Canada has tie-ups with most major Canadian banks to offer such services to their customers at reasonable costs. Given the current economic meltdown which has brought mortgage finance rates to an all time low, many Canadians are taking advantage of the situation by going in for refinancing and thereby getting rid of credit card debts. Now is the right time to act and get rid of your debts.