You have made up your mind and decided to consolidate debts working on eventually eliminating it completely. However, you don’t know which type of loan to apply for. Should you obtain an unsecured personal loan, or a secured loan like a mortgage or home equity? Your bad credit ratings indicate expected high interest rates as well. Here is some relief – It doesn’t have to be too complicated!
Unsecured Vs Secured Debt Consolidation Loans
Taking a loan involves the lender with the risk of you not being able to pay back the borrowed money. Therefore the lender would charge you more interest for the loan especially when you are labeled as bad credit. Your job is to reduce the rate as low as possible. When you have an asset that can act as collateral the lender can use it as security, and therefore can offer you lower rates. A mortgage, refinancing a mortgage or a home equity loan is amongst the secured debt consolidation loans.
Remember that even though you will be offered better rates you also have the chance of your house being repossessed; therefore, make sure you keep a tighter budget.
Not every one has an asset and because of this unsecured debt consolidation loans were designed to help people with bad credit pay off their debts with a consolidation loan. Naturally, the interest rates you will be offered will be higher than a secured debt consolidation loan, but, considering that it will eventually help eliminate your debt you might want to apply for one.
Comparing Debt Consolidation Quotes Online for the Best Rate Possible
Take advantage of the competition. While the bank may decline your debt consolidation loan application due to bad credit ratings an online lender will be your salvation to this particular problem. Comparing debt consolidation quotes online is free and these days, is very fast. You have nothing to lose! It will also give you a better idea of the market and by comparing more lenders you will unintentionally avoid being scammed.