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There are basically two kinds of loan, an unsecured loan such as a credit card, where the company who are giving you the credit, have no security such as against a car or house. Or a secured loan, in this case the company does have security in the form of, for example, a second mortgage on your house. This is very common if you take out a debt consolidation loan.

Loans for debt consolidation can be a very useful way of lowering the amount of money they pay out each month to cover all your credit bills. This will include things like credit cards, store cards, monthly car payments, and so on.

If you own your own home, and the mortgage is less than the value of the house, you have spare cash tied up in the house, which is known as equity. With secure loans for debt consolidation you can get at the cash that is tied up in your house.

Many people take out several loans over a period of time, these can be to buy a car or to pay for a holiday, you may also have two credit cards and a store card. The monthly payments on all these separate loans can, over time, start to add up to high payments, which can be difficult to make every single month.

As time goes on you will find that it's harder than before to make these payments. Perhaps you went a little crazy with the 'plastic' over Christmas, and by February/ March you find that the cards, when added to all your other payments, are just too much to cope with.

The best deal for lowering your monthly payments is to take out a separate loan through what are known as, secured loans for debt consolidation. This may sound like you just adding another debt to a list you already can't pay.

But once you understand how secured loans for debt consolidation work you will see that there is an easy way to reduce your monthly payments to an amount that you can manage, without stretching yourself every month.

A broker will be able to put you together with a company that will be able to give you a lump sum of money which you use to pay off all the cards, and other debts that you have.

You are then just left with one loan to pay each month. You may be thinking all that you have done is swapped a lot of small monthly payments for one big payment, how does that help?

The answer is that you have swapped many small payments that add up to a lot of money each month, for one single payment that will probably be a fraction of what you were paying before.

So, you are swapping a big monthly debt for a small monthly payment. So what's the catch? There is a catch with secured loans for debt consolidation; the company that gives you the money to pay off all your debts will want to be sure that you will make these new payments every month. So they will want some security, this is usually a second mortgage on your property.

This mortgage releases some of the cash sat there in the value of your house, and bails you out of the debt you were in. With your monthly credit payments drastically cut you now have more spare cash in your pocket instead of paying out big interest payments every month to credit card companies.

So, if you have many small debts that are eating away most of your wages every month. This could be a good way of paying off the debts and replacing them with a much smaller monthly payment that you can actually afford.