Getting out of debt is easier said than done. Fortunately, there are
many options available to people hoping to eliminate or reduce high
consumer debts. Before filing for bankruptcy, which is more damaging than
having excessive debt, consider other alternatives. For example,
acquiring a secured or unsecured debt consolidation loan is one method to
becoming debt free.
Ways to Eliminate Unnecessary Debts
There are many ways to reduce debts. Some people prefer to eliminate
debt without obtaining a loan. In this case, getting second employment or
seeking a higher paying job may provide you with the extra cash to pay
down balances. There is no easy way to reduce debts. Furthermore,
eliminating debts take time. Because of high finance fees, paying double the
monthly minimum may not result in a significant reduction. However,
debt consolidation loans have lower rates, which mean lower finance fees.
What are Unsecured Debt Consolidation Loans?
Unsecured debt consolidation loans are granted by banks and other
financial institutions. These loans are not secured by property. Hence, they
are also termed no-collateral loans. Getting approved for these types
of debt consolidation loans are not easy. If you have too much debt, the
majority of lenders are hesitant to extend you additional credit. On
the other hand, if you have a very high credit score and earn a sizeable
salary, obtaining an unsecured debt consolidation loan is feasible.
Overall, individuals with a superb credit rating know how to use credit
responsibly. Besides, these individuals will not risk injuring their
The disadvantage of unsecured debt consolidation loans is the higher
rates. Because, lenders are taking a gamble, be prepared to pay a high
interest rate. Still, lender rates are low in comparison to typical
credit card rates
What is a Secured Debt Consolidation Loan?
A secured debt consolidation involves collateral. To get approved for
these types of loans, the lender will request a valuable piece of
property. A vehicle title or boat title may serve as sufficient collateral.
If you own a home, consider obtaining a home equity loan or line of
credit for the purpose of consolidating debts. These loans do not require a
high credit rating. However, applicants with good credit will receive
prime rates. Avoid defaulting on secured loans. Failure to pay will
result in the lender taking full possession of your property.
View our recommended companies for
Bad Credit Debt Consolidation or view all of our Recommended Debt Consolidation Companies Online.