Forms of Consumer Credit For Debt Relief

Various forms of consumer credit may be used for debt consolidation. Debt consolidation gives you the financial support to eliminate all your creditors and live debt free. This method of debt relief enables you to combine numerous high-interest debts into a single low-interest loan.

Debt consolidation occurs with three types of consumer credit: installment loans, term loans and open-end credit. Each type allows consumers to save money on debt consolidation.

Lenders arrange installment loans for debt consolidation so borrowers repay the principal and interest in equal payments. Installment loans carry fixed interest rates and monthly payments. These loans may be unsecured or secured with a valued asset, such as a car, home or securities in a margin account.

Debt consolidation with term loans involves consumers borrowing a specific amount for a fixed period. Consumers pay off the loan in one lump-sum payment at the end of the term. Term loans, or single-payment loans, can feature fixed- or variable-interest rates.

Open-end credit, or a personal line of credit, offers flexibility in accessing borrowed funds, allowing consumers to borrow money as needed for debt consolidation. Depending on the interest rate, open-end credit can provide consumers with an effective option to fund debt consolidation.

About the Author
Settle your debts today! Read about debt relief from financial writer Brad McDonnell, who is an expert on personal finance topics involving debt consolidation, credit card debt, bankruptcy. Credit Solutions provides an affordable consolidation alternative.

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