A Basic Introduction to Debt Consolidation and its' Benefits: Part 1
According to the Oxford dictionary the word consolidate means, very simply, to "combine into a single unit", and debt is "money or services owed or due". Therefore, we can describe the concept of debt consolidation as the act of borrowing a sum of money equivalent to the sum of a persons’ current debt, and then using this borrowed money to pay off all their previously incurred debt.
This might not sound like the best idea, but there are certain benefits to debt consolidation. We will discuss these benefits later on, but first let us talk about the different types of debt consolidation.
There are two main types: Unsecured and secured debt consolidation.
- Unsecured debt: This basically means that a borrower will lend you money without any way of recouping their losses if you should choose not to pay them. In other words, they have no security. This type of lending is obviously a higher risk to financial institutions, and for this reason, they are not normally willing to lend very large sums of money without some form of security. So, we will not be focusing on this kind of loan as it is usually of insufficient size to consolidate ones debt.
- Secured Debt: With this kind of debt, a lender will borrow you money, provided that you can give them some way of getting their money back, should you default on your repayments. This usually means you will give the borrower the title (i.e. temporary ownership) of an asset wholly owned and completely paid for by you. More simply, they are willing to loan you large sums of money if you give them the legal right to sell something you own if you do not make your repayments. This is normally the title deed to some real estate, but any sufficiently valuable asset should be fine. Due to the size of these loans, they are usually more suited to debt consolidation.
In part 2: The two best types of secured debt consolidation loans, and some of the greater benefits of consolidating your debts.
About the Author
Written by: Johan H. Louw Owner of this site -- http://debtconsolidation.info-sites.net
Happy Anniversary for Finance, Not Small Business - Barron's Online
In the neat world of old-fashioned economics texts, this increases bank reserves, which in turn expands the money supply as banks make loans and increase deposits. If things ever worked some neatly and deterministically, they aren't now.
Money-lenders Hotchin and Watson give up on mum and dad - New Zealand Herald
Former Hanover owners Mark Hotchin and Eric Watson have decided they will no longer hit up mum and dad investors for cash because it's "too hard" without the Government guarantee. Mr Hotchin wrote to investors in finance company FAI Money this week ...
Campaign-finance measure's backers sue over ballot ... - Contra Costa Times
Supporters of a measure that would create a pilot program of public financing for elections have sued foes who claim the plan would raise taxes and let politicians pay cronies with taxpayers' money. "Lobbyists are so desperate to keep today's corrupt ...
Geithner urges reform on housing finance market - CNN Money
WASHINGTON (Reuters) - U.S. Treasury Secretary Timothy Geithner said on Wednesday that "fundamental reform" of the government's role in the housing finance market is needed and it will be next year before proposals are ready for Congress. He told a U ...
Talecris Biotherapeutics to Present at the Goldman ... - MSN Money
Talecris Biotherapeutics Holdings Corp. TLCR today announced that Lawrence D. Stern, Chairman and Chief Executive Officer of Talecris, will present at the Goldman Sachs Leveraged Finance Healthcare Conference at 8:15 a.m., Wednesday, Mar. 17 at the ...