Debt Consolidation - Secured, or unsecured loan?

Making the decision between getting a secured or a unsecured debt consolidation loan is often not up to the borrower, as personal financial status will dictate that which the lender will be willing to offer.

Swamped in debt? No need to panic. Take some solace from the fact that, you are not alone at this desperate time. Literally millions of people around the globe are struggling financially having over extended themselves with excessive borrowing. Not all is lost though, positive action is required in order to secure your home and your future and a good debt consolidation program can get you on track quicker than you could ever have imagined.

There are a few different types of debt consolidation program available, from debt management companies, who will negotiate with your creditors for lower payments and then ask you for a monthly payment so they can distribute the newly arranged payments for you. Basically, as the title suggests managing your debt. This is probably the best option of debt consolidation for people who don't own their own homes and therefore have no collateral.

The other main type of debt consolidation is the consolidation loan that can either be offset against a form of collateral, ie your home (secured loan) or a standard consolidation loan that you will need a reasonably good credit score to be approved. This is generally called an unsecured loan. An unsecured loan would be the most preferable as you are not risking your home or whatever you have financed the loan against should something unforeseen happen that makes it impossible for you to keep up payments.

The interest rates vary between the two; secured debt consolidation loans having a lower interest rate than that of the unsecured loan this is because it reflects the offsetting of any risk the lender is taking as the borrower has to be able to offer something of value in return for the loan, should the account fall into arrears. 

Before you start looking at debt consolidation you should take into consideration known methods of debt elimination that are perfectly ethical and legal, that can eliminate debt in as short a time as three years when incorporated alongside a consolidation loan. These methods are not new and the financial institutions have done their damnedest to keep this information hidden. So don't allow yourself to be a victim of "debt bondage" check out the sites at the end of this article.

Article Tags: Debt Consolidation, Consolidation Loan, Unsecured Loan

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