By MIKE SELVON
 When an individual takes out a loan in order to pay off another, this is known as debt consolidation. There are benefits to taking out this type of loan: multiple payments are reduced to one and there is a fixed interest rate for the term of the loan. In addition, there is a greater sense of financial freedom when opting for debt consolidation loans.
The process usually entails a secured loan against something considered as collateral. For example, people often secure a mortgage against their house.
The fact that there is collateral with the loan means that there is a lower rate of interest because the owner of the asset (in this case, a house) agrees to allow the forced sale of his asset to enable the repayment of the loan should he default on payments.
With a lowered risk to the lender comes a lower interest rate for the borrower. Loans for debt are helpful in this way.
People often turn to debt consolidation once they have accumulated an excess of credit card debt, due mainly to the |
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