The Unsecured Consolidation Loan - How Will it Benefit You?
Many people are looking for a solution to their debt issues and the majority are turning to the unsecured consolidation loan for salvation.
The name for this type of financial product is the consolidation loan, and as with most loans you have two options available to you, these are the secured and the unsecured consolidation loans.
Generally, if you need a large loan to consolidate or if you are in quite serious financial trouble you may be left with no other option by lenders than the secured loan. The lender will prefer this option even though the interest rate is more favorable to the borrower as it enables him to offset his risk because the loan is secured against the borrowers property or other loan covering collateral, such as investments or a car perhaps.
The unsecured consolidation loan is the flip side of the secured loan and therefore needs no collateral but there is a catch; you will find that you need a relatively good credit history which, ironically, is what people are trying to achieve with an unsecured consolidation loan in the first place. The main benefit of an unsecured consolidation loan over a secured loan is that you remove the threat of losing something as important as your home should something unforeseen happen that makes it impossible for you to afford the loan repayments.
The negatives of the unsecured loan are that the interest payments are higher than a secured loan, although not significantly higher, and, as already mentioned, they are dependent upon the borrower having a pretty good credit history. A word to the wise though, before making any loan application always find out the qualifications for a particular loan and be upfront about your credit history, it may be a good idea to have a recent copy of your credit report to hand.
The reason you need to do this is because every loan application, successful or not is a black mark on your credit history. So only enter into the application process if the chances of approval are very high.
Always check out the companies you deal with, don't be the victim of a scam; debt consolidation companies are well regulated and you can check out whether they are reputable or not with the Better Business Bureau, you can find their site here http://www.bbb.org/.
Before looking at debt consolidation you should look into little known methods of debt elimination that are both ethical and legal and that can reduce your debt to zero in as little as three years when used in conjunction with a consolidation loan. The financial institutions have kept this knowledge quiet but you can find out more by using the links at the end of this article.
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