Debt consolidation is an easy solution for all those debtors who are looking for a hassle-free way to pay off loans. Debt consolidation involves combining two or more debts under a single loan.
Sometimes, when the debtor is in danger of defaulting, debt consolidating agencies may also buy these loans at a discount, so the lenders can recover their money without the debtor having to declare bankruptcy.
In some cases collateral may also be required if the original loans were unsecured. This is a popular method used by students all over the world to consolidate their student loans and mortgage loans into one. Since both these loans typically have high principals and are of a long term nature, it makes sense to converge them.
In South Africa as well, many lenders including banks offer debt consolidation facility along with proper advisory services as it reduces the financial burden on their clients.
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