What's The Difference Between a Debt Consolidation Services And A Loan?

Debt consolidation is a lose phrase that can mean either a service or a loan. So what exactly is the difference between a debt consolidation service and a debt consolidation loan? A debt consolidation service is a program that creates a structured repayment plan of existing unsecured debt  where you make 1 monthly payment without requiring a new loan. A debt consolidation loan is also known as a home equity loan. With this loan, you're extracting equity out of your home in order to pay off debts such as credit cards and medical bills. Now that you know the difference, you might be wondering which debt consolidation option is best for getting out of debt. The answer entirely depends on what you'd like to accomplish. Debt consolidation loans are typically only an option if you own a home because your home is used as collateral. One advantage of a home equity loan is that the interest rate is much lower than most credit card interest thereby can significantly reduce monthly payments. The problem is that with a home equity loan, the life of the loan is extended to 15-30 years. That is a long time to pay off a starbucks cup of coffee. Of course if you're interested in paying off your home equity loan faster, you can make larger monthly payments and be out of debt just as fast as you would be if you decided to go with a debt consolidation program. If you do not own a home or are interested in paying off your debt in 3 to 5 years, a debt consolidation program can help you achieve your goal. As I mention early, a debt consolidation service or program is not a new loan. When you enroll in a debt consolidation program, a debt specialist looks at your financial situation and determines a custom plan to pay off your debt. Debt consolidation companies then contact all of your creditors to notify them of your enrollment and negotiates a repayment plan. Each month you would write 1 check to the debt consolidation company, and they pay your creditor directly.

Lincoln Debt Relief offers debt consolidation and debt negotiation programs that can get you out of debt sooner rather than later. If you'd like to find out your options, you can requestion a free consultation using the form or call us toll free at 1-877-822-0580