Loanfactz Definitions
Glossary of Legal Terms, Loan Terms and Home Construction, Repair and Maintenance Definitions. Some words have more than one meaning. Only those meanings relating to this site will be used.
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Consolidate
To consolidate means to combine, an exmaple would be to combined several debts into one loan, usually for the purpose of reducing your monthly payments by extending them over a longer time period.
Debt Consolidation
Be cautious of debt consolidation plans. A debt consolidation plan allows you to make just one payment to the consolidator, instead of numerous smaller payments to your many creditors. These plans are not always the best option for your overall financial health. The consolidators may promise to lower your monthly payments, however, this action will extend the length of time it will take to pay off all your debts and ultimately you may pay more in finance charges. Make sure that you are with a reputable credit counseling agency before you enter into any debt consolidation plans.
The use of debt counseling may appear on your credit report. Some creditors consider this activity negatively, some may consider it as a positive step.
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