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What's the difference between a debt consolidation loan and debt counseling services?

Answer:

A debt consolidation loan is a loan you get to pay off multiple loans or lines of credit. Debt consolidation loans are useful when you have varying amounts of debt on varying items (car loan, credit cards, medical bills, etc.). The idea is to get a loan at a fixed and low interest rate to pay off your varying debts. It typically lessens the total amount of money you end up paying. Credit counseling, also known as as debt management plan is another solution to handle debt that is spiraling out of control. Reputable credit counselors actually offer a wide range of solutions based on your specific situation. They'll review your finances, advise you about budgeting, and devise a program to help you get out of debt.

When a lender loans money to payoff all your credit cards and other debt, you have one monthly bill which is paid the lender. Often these loans do not have a lower APR and can be as high as APR(Annual Percentage Rate)'s of 24 percent. Even if you do get a decent APR you are still in debt. The big mistake is people give up secured debt for unsecured debt. Most Debt Consolidation Loans are given in the form of home equity loans which means if you do not pay you lose your home.

A second way that credit counseling can be a "good" term is to actually mean counseling. Many credit reduction companies and private financial institutions offer credit counseling as a type of financial planning. Counseling can help figure out how much debt is owed and how to control debt in the future.

First answer by ID1096311559. Last edit by Sdresh. Contributor trust: 2614 [recommend contributor ]. Question popularity: 75 [recommend question].

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What is the difference between debt and loan?
A debt is something you owe someone, a loan is something you borrow
What is the difference between debt service and debt repayment?
The main difference between the two is that when a account being. Debt services means they consolidate your debt and debt repayment means they are asking for repayment through money. You should...
What is difference between loan and debt?
loan is money borrowed and debt is money owed. :-)
How easy is it to get a debt consolidation loan?
I have learned there is really no such thing as a consolidation loan anymore. The banks and other loan agencies do not carry this particular loan anymore.
What is debt consolidation credit counseling?
Debt consolidation, as simply explained as possible, means taking out one loan to pay off multiple other loans. Frequently, you can get the new loan at a lower interest rate or you may want it just...