Types of Secured Loans

Do you know how you can reduce and ultimately clear all the debt you owe?

In many situations, a debt consolidation loan is the most effective solution. Especially If you have higher interest unsecured loans or credit card debt, you can combine these into a lower interest loan. Such a loan is ideal for paying back bad credit debt and most types of ongoing fees. The greatest challenge you face is finding a loan with a suitably lower rate of interest to help efficiently pay off all your existing debts.

You can approach a number of different places to find out more and to apply for a consolidated loan. Some banks and building societies offer such a service, but the most popular option these days are private lending companies like appleloans who focus on bringing you the most competitive terms and rates.

An Important Choice

There is one major consideration that you need to decide on early on. As with many other kinds of loans, there are two major varieties of debt consolidation loans, unsecured and secured loans.

An unsecured debt consolidation loan is typically in the form of a personal loan. This kind of borrowing allows eligible applicant to take out a loan without having to put forward any type of collateral. The obvious advantage is that your property or vehicle won’t be put on the line, but when it comes to clearing your debt there are other factors at work.

The consolidation process will only work in your favour if you can lower the interest rates you are paying. An unsecured loan will usually have similar or even a higher rate of interest than the average of all your current debts. This makes most unsecured personal loans ineffective for paying off multiple existing debts. To make matter worse, if you are struggling with your debt burden, your credit rating may not be too great. A poor credit history will further increase the rates on an unsecured loan, and in many cases you may not even be eligible in the first place.

A secured loan could present a better solution, but only if it is planned out well. With secured debt consolidation loans, you can borrow much greater sums of money and get a lower rate of interest. If the total debt you owe is more than 10,000 pounds than an unsecured loan is unlikely to cut it. Also a bad credit rating is less of an issue. As long as you have a good and stable source of income, this type of loan is certainly worth considering.

A Permanent Solution

Managing your debts through consolidation will only be the first step to financial recovery. Adjusting your budget and spending habit is the only way of achieving long term stability. Talk to a financial advisor to get a better understanding of your specific situation and come up with a plan to pay off all your debts once and for all.

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