If you feel like you are drowning in debt, and have overdue bills coming in every day and you feel like you are paying and paying with no end in sight, a debt consolidation loan may be something that can help you. If your objective is to reduce interest rates, avoid bankruptcy, consolidate your bills and have one monthly payment, then you may be able to lower your cost of credit by consolidating your debt through a second mortgage or a home equity line of credit - better known as a debt consolidation loan.

A Debt Consolidation Loan is used to combine all your existing consumer debt or credit card debt into one single loan and make only one monthly payment. It allows you pay off your bills and stop creditors from calling. Depending on the amount of debt that you have you may or may not have to have collateral. Consumers with property such as a home or car may get a lower rate through a secured loan using their property as collateral. Since the home or car is used to secure the loan this poses less risk to the lender, which is passed on to you in the form of a lower interest rate.

A debt consolidation loan is often a great option when someone is trying to pay off a lot of credit card debt, since credit cards can carry a much higher interest rate. With the lower interest rate, you can pay less finance charges and more to the balance allowing the debt to be paid off sooner. Something to always keep in mind before consolidating any of your debt, many people are in credit card debt because they spend more than they earn. If you don't deal with the behavior that got you in so much debt, the consolidation will not benefit you much because you will have a false sense of relief and be tempted to charge on your credit card(s) again.

Advantages of a Debt Consolidation Loan:

• Most generally the interest rates on a debt consolidation loan are lower than the interest rates on credit cards and other unsecured debts.
• A debt consolidation loan allows you to combine all of your unsecured debt which allows you to make only one monthly payment instead of multiple monthly payments.
• A debt consolidation loan allows you to pay off your bills so creditors will stop calling and harassing you.
• If you use the equity in your home, these loans may provide certain tax advantages that are not available with other kinds of credit.

Disadvantages of a Debt Consolidation Loan:

• A debt consolidation loan usually requires you to use your home as collateral, so if you can't make the payments or if your payments are late, you could lose your home.
• The costs of a debt consolidation loans can add up. In addition to interest on the loan, you may have to pay "points" which one point is equal to one percent of the amount you borrow.

Debt consolidation programs are viewed as positive by banks and creditors. By engaging in a debt consolidation loan, your creditors realize you are making a good faith effort to repay your debts. Most generally creditors are willing to work with debt consolidators to reduce your payments and in turn, your debt. Pay off your debt quicker and easier than you ever thought possible with a debt consolidation loan.