What Do Debt Consultants Mean By Debt Consolidation Loans?

Most people in and around Victoria are aware of the concept of a debt consolidation loan. These loans may be recommended by debt consultants if the client meets specific criteria.

As a general overview, a debt consolidation loan is a large loan taken out to pay off all the debts for the individual or the couple. The size of this loan may be considerable, although it typically does not include secured debt such as mortgages, auto loans, or student loans. The reason these types of debts are not included is based on the low interest rates offered with these higher value loans.

The Process

Professional debt consultants have a very specific process when working with a client. They start with a complete review and analysis of the current financial situation. It is only through this process that the professional can make informed recommendations on options for debt repayment options.

To determine if a debt consolidation loan is a possibility, it is essential to itemize all unsecured debt. Then, based on the individual’s credit score and ability to qualify for a consolidation loan, it may be proposed as an option.

Key Factors

While a consolidation loan recommended by debt consultants wipes out all debt, it still requires a monthly payment to repay the large loan. With a lower interest rate this is often less than making multiple payment and allows for more rapid elimination of the debt.

At the same time, people in Victoria need to develop a budget, stay on the repayment plan, and avoid any late or partial payments to prevent costly penalties or additional fees.