These are indeed the worst of times. Especially if you are a home loan borrower or have borrowed money in form of a personal loan, loan against property, withdrawn money on your credit card or have just borrowed money to redo your home.

Interest rates on such loans are showing no sign of coming down even as inflation rate goes up rubbing salt into your wounds. You must be having a financial problem at your hand considering that you must be making provisions for your home loan EMI, credit card payments, vehicle loan etc.

Are you caught in the dilemma of mounting credit card bills and higher interest rate loans? Are you tired of making multiple payments to different lenders on different days of the month?

Do you want to get out of it? If your answer is 'yes' then a debt consolidation loan can render you valuable help in this regard.

Here is some advice to extend you a helping hand.

Advantages of debt consolidation loan

The debt consolidation loan unifies all the debts of the borrower that one owes to various lenders and pays all of them with a lump sum payment. Now the borrower has only one loan to repay which is the debt consolidation loan.

This type of loan offers a simple solution to the puzzle of money management, thus making life much simpler. Such loans are given after taking into account all outstanding bills and loans and by combining it into a single loan.

The monthly payments are kept lower than all the individual loans and debts combined together. The rate of interest is low and also gives more time to the borrower which gives a chance of saving some money.

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These loans definitely don't belong to the category of various other loans that are commonly known like car loans or home loans.

There are two types of debt consolidation loans: secured debt consolidation loan and unsecured debt consolidation loan.

� Secured debt consolidation loans use collateral to back the loan in case of a default. These types of loans usually provide the lowest interest rates since the lender's risk is offset by the collateral.

� Unsecured debt consolidation loans address the debt burden perfectly when you don't have a home or property against which you can acquire loan, or you don't prefer to offer your home as security. Security is not required in these loans. However, the interest rates are higher than in the case of secured loan plans. Nevertheless, there will be an overall reduction in your monthly outgoing.

Where can I get a debt consolidation loan?

Though no Indian bank [Get Quote] has yet come out with such a ready made product a borrower can always talk to her/his bank to work out a solution. The obvious things that a lender will run a check on in this situation are: your credit history, your loan repayment record, your income and expenditure per month etc. In short, a lender bank will go through all those variables that they check while sanctioning your home loan or any other retail loan.

One need to, however, keep a check on interest rate that the bank will charge on such a loan if you don't have a good credit history.

In short, you can avail of such a loan only in case you have a good repayment capacity and a good credit history.

Why do you need a credit counselor?

Before selecting a bank, a borrower should consult a credit counselor.

The advantage of having a good credit counselor is that they could mediate and negotiate between debtor and creditors. They would do a comparative study of the interest rates offered by various banks and also the terms and conditions of unsecured debt consolidation and choose the best one.

The credit counselor also ensures that you have ample time in hand to stabilise your finances and also to pay your money in small installments.

ICICI Bank's [Get Quote] Disha and Bank of India's [Get Quote] Abhay are two such initiatives where credit counselors guide you through your financial problems and try to find a solution. These institutions, though, do not help you arrange a debt consolidation loan.

Once you have chosen the bank and gone ahead with the formalities of loan application, you can breathe easy and let the loan take care of the rest.

A debt consolidation loan can contribute significantly in your effort to come out of your debt mess.