Debt consolidating finance home owner
“If the principal is paid down faster [than it would have been without the loan], the balance is paid off sooner, which helps to boost your credit score,” says Freeman.
For example, say an individual with three credit cards and a total of ,000 owing at a 22.99% annual rate compounded monthly needs to pay 47.37 a month for 24 months to bring the balances to zero.
Once in place, a debt consolidation plan will stop the collection agencies from calling (assuming the loans they're calling about have been paid off). The Internal Revenue Service (IRS) does not allow you to deduct interest on any unsecured debt consolidation loans.
If your consolidation loan is secured with an asset, however, you may qualify for a tax deduction.
Theoretically, any use of one form of financing to pay off other debts is practicing debt consolidation.Secured loans are backed by an asset of the borrower’s, such as a house or a car, that works as collateral for the loan.