If you are looking to pay off your debts that have been racked up across multiple credit cards and personal loans then you may be considering a debt consolidation loan. The idea of a debt consolidation loan as the name suggests is to consolidate all your existing debts into one new debt. Don't be fooled into thinking the loan pays the debt off, what you owe remains the same but it can make things easier to manage and bring down your interest payments making debt reduction faster. These loans are offered as secured or unsecured loans and there are pro's and con's to each.

The advantages to you can be significant. For example, you may have ten credit cards with a total outstanding balance of $15,000 and annual percentage rates ranging from 8 percent to 20 percent. Consolidating all these accounts into one $15,000 debt consolidation loan at say 9 percent interest will probably provide great relief to you.

One instant benefit is only having to remember to make one monthly repayment. Obviously, the biggest benefit is that you pay less interest on the debt and more of your repayment dollars go towards paying off the principal.

Debt consolidation loans come with a serious risk. It's easy to think you have acheived something with your debt and you now have access to the full limits of your credit cards again - which is the reason for the reminder stated above. If you go ahead and do that, you could end up in bigger trouble than before.

If you typcically only pay the minimum due each much on your credit card bills then the debt consolidation loans may seem different at first. The monthly payments are likely to be higher than such minimum payments. You will need to find ways to cut down and end the habits that got you into debt.

In taking out debt consolidation loans, avoid stretching out the payment (usually in order to have a lower amount in monthly payments). Doing this will mean your total payments for interest and fees will be bigger. That won't make financial sense.

As your credit cards and personal loans are unsecured then the quickest and lowest risk option is to move these debts over to an unsecured debt consolidation loan. The interest rate for an unsecured debt consolidation loan will be higher than its secured version, but you will not be putting any of your assets at risk in case things don't go as planned.

In order to gain approval for an unsecured debt consolidation loan then your credit file is going to need to be in good shape as the debt won't be secured against any other asset the bank can reclaim if you failed to pay. Granting that you do qualify, the bank will very likely lend no more than $5,000 in unsecured debt consolidation loan. You will need to look elsewhere if you still need more money.

You could try arranging for secured debt consolidation loans. This requires that you put up an asset as collateral. The bank will put a lien on it and take it away from you if you fail to follow the loan payment schedules. If you have no asset to offer, then secured debt consolidation loans are simply out of your radar screen.

The easiest unsecured debt consolidation loan you can arrange is transferring balances from several credit cards onto a low-APR or a zero-percent promotional rate credit card. If you do this, you should strive to make substantially higher payments than the monthly minimum and/or to pay off the entire balance within the promotional period.