Need an Unsecured Debt Consolidation Loan?
What is an unsecured debt consolidation loan and what information do you need to know before you seek one?
Let's break down this process and explain it in detail.
An unsecured loan, is borrowing money that is NOT secured againist an asset, such as a house, car, stocks, or bonds. In other words, you have a loan that should not effect your assets if don't make the payments. But, as with any loan, there are serious consequences if you do not pay the loan on back.
Debt Consolidation, The concept of debt consolidation is a simple one, once you understand it.
With this type of loan, you are taking your current debt often from a variety of sources and creating a new loan. The primary purpose of this is to pay off all the old debt with one payment.
Example: Currently you may owe money to many different financial organizations or individuals that include:
- credit card balances
- an auto loan
- a personal loan
- student loan debt
- borrowings from friends or family
Okay, let's summarize. The concept of an unsecured debt consolidation loan is to bring together all of these borrowed balances under one new loan, not secured on any of your assets.
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Why Consolidate Your Debts?
There are many compelling reasons to do this.
One of the most important is saving money on interest charges. You might be shocked to discover how high some of the interest rates are based on the current debt you have.
Credit card companies can charge 20-30 percent APR per year if they choose to! That interest adds up quickly, especially if you're unable to afford more than the monthly minimum.
While interest rates for other types of debt are usually lower, it can still make sense to seek a new loan. You can make one payment every month instead of severa and potentially save on interest charges.
Another advantage of this is that if you've fallen behind on any of your debt payments, consolidating them into a single loan payment means you won't have to deal with debt collection agents chasing you all the time.
We deal with this important topic in much more detail in the articles below. Click any of the headlines to read more.
Also, feel free to contact us with questions or comments.
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