Unsecured Consolidation Loans 101
Loans, unpaid bills, debts, increasing expenses and creditors calling you repeatedly asking for payments can leave you feeling overwhelmed and lead to increased tension, sleepless nights and many other symptoms of stress. If you are like many people today, you may had to take out loans or other debts in the past for various reasons but are now unable to repay those debts. If you do not have any collateral to provide for a secured consolidation loan, you may feel like there are no options available to you. Unsecured consolidation loans may be the answer to your troubles.
Unsecured consolidation loans combine all or some of your debts into one debt with a single monthly payment. Unlike secured loans, they do not require you to provide personal property as security on the loan in the form of collateral. Unsecured loans generally have lower interest rates, which can save you money on your monthly payments.
Keep in mind that while the interest rate on an unsecured loan may be lower than the rates charged on the debts it is used to repay, its rates are usually a bit higher than those of secured consolidation loans. Lenders generally charge a slightly higher rate to cover the risk involved with an unsecured loan. Despite this higher interest rate, there are several advantages to unsecured loans. These are:
you do not need to provide collateral in the form of personal property such as a home, a car, or other valuables
since you do not have to provide collateral you do not risk losing your property
it combines several debts into a single, easy to manage debt
there is a fixed time period in which to repay the loan, which enables you the eliminate or reduce your debts within a specified period of time
usually have a quicker approval process
you only have one creditor rather than several, which allows you to build a better working relationship with that creditor
it may provide you with a chance to improve your credit rating
unsecured loans generally require less paperwork and have fewer procedures to follow
Unsecured consolidation loan amounts generally range from $1000 – $25,000 and have terms from 5 to 10 years. People who have bankruptcy, arrears, defaults and CCJ’s (County Court Judgments) may also be eligible for unsecured loans of this type.
It is advisable to research consolidation companies carefully prior to applying for a consolidation loan to find one that will suit your particular situation. Many consolidation companies, such as banks, and brokers now have their own websites that may provide you with information such as quotes and what packages are offered.
Unsecured loans may be useful to eliminate your debts and improve your credit history without placing your personal property at risk.
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