With the huge increases in consumer debt we have been seeing in the financial market during the past couple of years, it really is not surprising that more and more people are having to opt for debt consolidation loans. The reasons for this are quite simple; as the benefits of debt consolidation loans increase rapidly as you get further and further into debt. The most basic advantages of debt consolidations are that:

- You can reduce your monthly outgoings
- You can bring all your debt repayments down to one convenient payment
- You can pay back your debts faster and become debt free

If you take a very practical and honest view of your debt you may realise that at your current levels of repayment it will take literally years to repay everything you owe. Credit cards can be one of the hardest debts to repay as they have the potential literally to go on forever. This is because most credit cards will only require you to make very low monthly repayments that do little more than pay back the interest that has accrued and this means that the principle debt is hardly getting repaid at all.

One of the main benefits of debt consolidation therefore is that it is specifically geared towards people who want to clear their debt. Indeed, simply allowing a debt consolidation loan to extend over years without reducing the amount owed is not possible. You will be lent a fixed amount and you will not be able to increase this amount whenever you feel like it. This is a big advantage over credit cards, which we can use to incur extra debt with extreme ease, albeit normally at a much higher rate of interest.

The debt consolidation loan will have set repayments for a fixed period, for example five years, after which period the debt will be repaid in full. However, many debt consolidation loans will run for terms much longer than 5 years largely due to the amount of debt the applicant is consolidating. It is not unusual for debt consolidation loans to approach twenty five years in length before the debt is repaid in full.

The other main benefit of debt consolidation loans is that they have the potential to save you literally thousands in interest payments. While credit cards and other similar forms of credit will charge you extremely high interest rates, often as high as twenty five to thirty per cent, debt consolidation loans will typically charge somewhere more in the region of six to twelve percent, depending on your circumstances (bad credit and applicants can expect to pay the higher of the two interest rate figures). This is far lower than credit card interest rates and means that a larger proportion of your monthly repayment will be going towards clearing your debt, which should be your ultimate goal.

When debt consolidation is the only avenue left for fixing the financial mess that you are in it is an extremely valuable product, but like so many other products on the market these types of loans still make money from you. The companies that provide these debt consolidation loans consistently pay more for your loan than that of an unsecured loan.