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A Debt Consolidation Loan allows you to pay off all your existing loans, credit cards and store cards - even your unpaid bills, and then refinance them all with one consolidated loan. The objective is usually to obtain a lower monthly repayment which is achieved by to extending the repayment period.
Ideally, you should not delay consolidating your loans until you are in financial trouble with defaults or missed payments. You should organise your loan as soon as you can foresee problems and use the reduced monthly payments to resolve the problem. This will then preserve your credit rating and enable you to obtain a lower rate of interest.
But if you do delay and earn an impaired credit rating in the process, all is not lost. There are lenders who will consider your application although, if you are accepted, you will have to pay a higher rate of interest and the odds are that the lender will want the loan secured against your home.
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