Debt consolidation is a loan that will allow you to pay back a few or a whole of your creditors into one time payment. So instead of having several few payments to pay back , you have now only pay just once to make is that the loan to consolidate a whole of your debts.

Debt consolidation will allow you to make your debt ratio lower. By spreading the repayment of installments over a longer period and thus reduce the monthly repayment of your loan. Debts of credit cards, personal loans, credit cards and other stores can be consolidated.

Debt consolidation benefits :

• Generally make lower the interest rate.
• All your creditors will be paid in full and promptly. Therefore, your credit rating can be maintained.
• Simplify your financial management (only one creditor to pay).
• Easier to establish and matched your budget.
• Debt ratio reduction.

Debt ratio :

• Your debt ratio should be around 30%.
• A debt ratio at around 50% represents a dangerous imbalance between your income and expenses.
• If your debt ratio is too high, debt consolidation enables you to reduce to a more reasonable and give you the ability to improve your financial situation.

Calculate your debt ratio:
Total monthly credit / Total monthly income = your debt ratio. Debt consolidation is really beneficial when you have outstanding debts with high interest rates (e.g interest rate credit cards).

What debts are eligible for consolidation?
You can consolidate most consumer loans such as credit cards, credit from department stores, utilities and many others. Not all debts can be consolidated into a consolidation loan. Your mortgage, for instance, can not be included.
The financial institution with whom you decide to consolidate your debts, be able to tell precisely which of your debts to you will be able to pay with this loan.

Who is debt consolidation?

• Your financial institution will decide if you can qualify for a loan to consolidate your debts.
• Normally a loan to consolidate your debts will decrease your monthly payments and reduce your debt ratio, which is why banks encourage this kind of loans.
• Whether you are an owner or tenant, professional or not, you can call you.
• But it must still have an acceptable credit rating and an income sufficient to demonstrate that you can repay the loan.

In other words, you must demonstrate that you are able to repay the loan in addition to your regular bills.

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