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So you've decided that a debt consolidation loan is the best way for you to attack your debt problem. Now you need to decide what type of loan to choose from. A consolidation loan will enable you to pay off all of your credit card debt with one lump sum of cash. Instead of making multiple monthly payments to multiple creditors, you will make only one monthly payment which in many cases is lower than the other payments combined.
Many people do not realize that when they make the minimum monthly payment to their credit card, only a small percentage of their payment will be applied to the principle balance. The majority of their payment will apply to the interest that is being added to their credit card balance. It will take years to pay off your debt at that pace. If you are able to consolidate your high interest credit cards into a usually lower interest rate consolidation loan, you are that much further ahead.
The two types of consolidation loans available are secured and unsecured loans. A secured loan will require some type collateral which is usually your house or car. These types of loans are easier to get because of the low risk to the lender. If you are not careful, you can really get into trouble with these types of loans. If you fall behind on this type of loan, the bank will repossess whatever collateral was used to secure the loan.
An unsecured loan is a larger risk for the lender because collateral is not required. An unsecured loan is harder to get; if you don't have excellent credit, you will not qualify for this type of loan.
The bottom line is this; if you use a consolidation loan to pay off your credit cards, do not make the mistake of running out and racking up new debt on those same credit cards that you just paid off. Get your debt under control, and vow to never repeat the mistakes that got you into financial trouble in the first place. | 
