Picking a low interest Debt Consolidation Loan

There are two types debt consolidation loan, secured and unsecured.
Secured loans are so called because you offer collateral as security for the loan. Collateral can be your home, car or anything the lenders deem valuable enough.
The interest rate on a secured debt consolidation loan is normally low, however, the property you put up as collateral is at risk if you fail maintain repayments on the loan.
Unsecured debt consolidation loans have no collateral. Lenders see them as higher risk because if you should stop making payments, they'd have no way of recouping their money. Nevertheless, some lenders are willing to take the risk and to make up for the risk, interest rates are higher than on secured loans.

Before deciding on the low interest debt consolidation loan, consider the following factors:

1. Stability of future income.
If you're sure you will have a stable income and be able to maintain the loan repayment, then you're better off with a secured loan which carries a lower interest rate.

2. Risk to Collateral.
If there's a slight chance that you might fail to maintain your repayments on time, then it's worth paying the little extra interest on an unsecured loan and not risk your home. Lender might nag you and even take you to court, but at the end of the day, you will have a home to go to.

Debt Consolidation Tips

• Put away all of your credit cards. Try to pay for purchases with cash or checks until your credit card balances are paid in full.
• Do not apply for credit cards that you don’t need.
• Determine the total amount you owe creditors.
• Pay credit cards with the highest interest rates first.
• Pay your lowest balances first to completely remove some of your debts.
• Investigate any opportunities to transfer your existing balances to a card with a lower interest rate.
• Reduce your spending and set a realistic budget.
• Set goals. Once you've achieved them, reward yourself with small indulgences.
• Review credit card statements and credit reports for errors.
• Keep records of income and expenses.
• Only charge what absolutely must be charged and not things you could pay for now.
• Use your debt card instead of a credit card.
• Request copies of your credit rating and credit score from Equifax, Experian, and TransUnion. You need all three, because each company may have different information. If the information on either credit history is wrong, correct it immediately.
• Pay your bills on time. Even if a company allows a grace period, don't use it.
• Own between two and four credit cards. Fewer cards shorten your credit history; more cards indicate that you are financially stretched.
• Keep your debt-to-income ratio under 20 percent.
• Pay more than the minimum required on your credit card.