Are you ready to throw in the blanket on ever getting out of debt? Don’t do it. You may have a chance to reduce your debt with unsecured debt consolidation loans. These loans are somewhat more difficult to obtain, but it is well worth the effort. You will find tips on how to use unsecured consolidation loans to put you back in charge of your debt. Instead of the debt controlling you, you will control the debt.
First it is important for you to understand the difference between unsecured loans and secured loans.
Let’s suppose you are a student just starting out your freshman year of college. Shortly after being accepted by your school of choice, you started receiving pre-approved credit cards. You accepted the offer and within 10 days or so you received your card. The first thing you did is go out and buy text books for your classes; to the tune of several hundred dollars.
Being short on cash you put it on your new credit card. You just made your first unsecured debt. If you forfeit on the loan for some reason, the credit card company can sue you, but they can’t take your school books from you. You did not have to use the books for collateral to get the cash to pay the book store.
Now let’s say you need to take a student loan to pay tuition, lab fees, additional books, housing, food and etc. Because of the amount you need, the bank or lending institution has said they will loan you the money. However to get it, you are someone, is going to have to put up collateral to secure the loan. Just in case you forfeit on the loan, this gives the bank the right to foreclose on whatever property was put up to secure the loan.
It’s time to move forward and the years have passed and all your student loans, family debts and credit card bills are burying you. You need a way out, but you don’t own any real property. Other than your car and it has a lien against it.
Your first step is to go to your personal bank and apply for an unsecured debt consolidation loans. If you have a good record with your bank, no hot checks or defaulted on any loans with them, you may well qualify for an unsecured consolidation loan.
Your personal banker will work with you to determine which of your loans should be consolidated in the new loan and which ones will not be. One of the reasons for doing this is most credit card interest rates will be much higher than a bank loan. However, depending on the type of student loans you have, you may have a lower interest rate, than what the consolidation loan will have.
There is also a good chance your bank may have a credit counseling service or be able to refer you a reputable non-profit credit counselor. This service could prove to be invaluable to you so as you don’t get yourself in over your head later on.
Normally you will find many unsecured debt consolidation loans will range from six months to five years. Whereas most secured consolidation loans will have a longer time for repayment from 10 years and up. Obviously the shorter the time fame for repayment the quicker you will get your debt reduced.
As you have seen there are two types of consolidation loans you may qualify for. Both have the same goal and this is to reduce your debt burden.
Depending on what your personal situation is and your ability to repay unsecured debt consolidation loans you may find the relief you are seeking.