Whether you have a little or a lot of debt, it’s important you take the necessary steps to work on lowering and managing it. If you allow it to get out of control, you risk your debt spiraling out of control. However, a secured debt consolidation loan can help you better manage your debt by lowering your interest rates and monthly payments.
There are two basic types of debt held by individuals and companies – secured and unsecured debt. As the name suggests, secured debt is a type of debt where there’s some form of collateral backing it. For instance, when a person visits a bank and seeks a loan, they may be required to secure it with their car title. This type of debt is known as secured debt. Unsecured debt is is when there’s nothing backing the debt, such as credit cards.
The main disadvantage with secured debt is the risk of losing the assets which are tied to the debt. If your house deed or car title is tied to a debt which you’re unable to pay, the holder of that debt may seek action to take those assets. Most mortgages are considered secured debt, which is why the default into foreclosure when the owner fails to meet the terms of their agreement.
There are advantages to secured debt, however. One of the greatest advantages is the significantly lower interest rates associated with them. Because there are assets backing them, creditors usually offer lower rates of interest with secured debt over unsecured. With unsecured debt, such as credit cards, you can expect to see annual interest rates as high as 19% or more.
Nearly everyone in debt can benefit from consolidating their debt accounts. Basically, secured debt consolidation involves using using a secured debt loan to pay off some or all of your debt. First, you’ll have to find a creditor willing to offer you a loan in exchange for some form of collateral. Once you have the loan, you can pay off all of your high interest credit cards and other debts.
The biggest problem people have with secured debt consolidation is finder someone willing to lend them the money. After all, those who seek this type of loan usually already have credit problems. I recommend starting with your local bank at first. Visit them in person and ask to speak to a loan manager. Tell them how you’re trying to consolidate your debt and see if they’re willing to offer you a secured debt consolidation loan.
If you can’t find a lender willing to offer you a secured loan, you should consider trying some of the debt management companies online. These companies do much more than just negotiate lower payments with your creditors, they may be able to broker a secured loan for you.
Debt elimination doesn’t come easily, but a secured debt consolidation can help you get on the right track to becoming debt free. Call a qualified debt advisory centre beforehand to get some advice tailored towards your specific debt situation. They’ll be offer to tell you if a secured debt consolidation loan is a good idea for you.