Debt consolidation loan pays off all your debts to immediately relieve you from burdensome old debts. After you have paid debts through the loan you are now supposed to make easy monthly payments to the one new lender. Thus you no longer make payments to many creditors. In other words, debt consolidation loan merges all your payments into single monthly payment of reduced amount.

To pay off greater debts, opt for secured debt consolidation loan, which comes against your home or any valued asset. The biggest advantage is that you get secured debt consolidation loan at lower interest rate which ensures reducing monthly payments towards the loan installments after you have cleared high rate debts. Also you can choose to repay the loan in larger duration of say 30 years if you want to save more money per month for other purposes. The loan amount depends on value of property pledged as collateral.

In case of smaller debts, better take unsecured debt consolidation loan without collateral, which makes it a risk free loan offer for the borrower. But you would be paying interest at a little higher rate depending on your credit history and other persona circumstances. An unsecured debt consolidation loan is meant for shorter repayment duration of 5 to 15 years.

And do not worry about your bad credit history. Debt consolidation loans are also meant fore bad credit people who have late payments, arrears, payment defaults or CCJs. With a bit higher interest rate such borrowers get the loan with ease in these days of competitive loan marketplace. Ensure that you pay back the loan installments in regular manner so that you avoid falling in a new debt trap.