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Sources for Debt Resolution
Debt consolidation occurs when consumers acquire a loan from a lender to
pay off multiple high-interest debts and combine them into one account.
Several different types of lenders exist to provide consumers financial
support for debt consolidation.
The following list provides five sources consumers can use to finance debt
consolidation:
- Commercial banks offer an array of loan products, such as personal
loans, lines of credit and debt consolidation loans. Homeowners who use
banks to finance their mortgage can obtain home-equity loans and
refinancing options to fund debt consolidation.
- Credit unions provide similar services as commercial banks. Credit
unions usually issue lower interest rates on loans than the interest
charged by banks because the credit unions are member-owned institutions,
not privately owned.
- Savings and loan associations, or thrifts, lend secured and unsecured
loans for debt consolidation. They offer competitive interest rates and,
many times, offer services to consumers with low credit scores.
- Consumer finance companies provide financial support for consumers with
poor or no credit histories. Consumer finance companies carry high interest
rates, which can negatively affect debt consolidation by wiping out any
potential savings for the consumer.
- Retirement loans, such as 401(k) loans, can help consumers with debt
consolidation. The employer becomes the consumer's lender, and repayment
occurs through payroll deductions. The positive aspect is that consumers
repay their own account.
Author bio:
Brian Williams, a graduate of the University of Texas at Arlington, has 11 years’ experience writing and editing at daily newspapers in Texas. Having worked his way through college and experiencing the transition to professional life, Brian understands how credit affects people’s lives. Credit Solutions is your alternative to debt consolidation.
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