Consolidating secured unsecured loans
If everything goes right, this could be the best option because terms and interest rates are flexible and could easily be changed to accommodate a swing in your financial situation.It’s also the option loaded with potholes that makes things so uncomfortable among family and friends that you wonder why you ever did it. The loan can be for any length of time and shortened or extended whenever necessary.Essentially, this loan allows you to pay credit card debts in full. However, if you have a low credit score or dings in your credit report, you may not be approved for consolidation loan.Rates for consolidation loans in February of 2019 ranged from 6% to as high as 36%, so even if you are approved, your rate may be so high that it doesn’t make sense when compared to what you currently pay.Consumers roll their unsecured debts into a single bill and use the consolidation loan to pay off the total amount owed.The advantages are that debt consolidation loans usually carry a lower interest rate and there is only one check and payment date each month.Compare that to your current costs before making a final decision on a debt consolidation loan.If you haven’t lowered your monthly payment and interest rate, a debt consolidation loan is not the right move.
If you do, the introductory period will be shortened to six months. Which brings us to the big question: Can you pay off your entire debt in the time frame allowed?The truth of the matter is that debt consolidation loans are just another name for personal loans and there are two types available – secured and unsecured – with many variations under each category.A secured debt consolidation loan – just like a secured personal loan – is backed by collateral such as home, car or property and is the easiest route to consolidation.These cards allow you to transfer the balance from all your credit cards and pay them off with no interest for an introductory period ranging from 6-24 months.
To qualify, you will need an excellent credit score (740 or higher) for the best deals (18-24 months at 0% interest) and at least a 680 or higher score to qualify for any of the rest (6-18 months at 0% interest).
A debt consolidation loan is financing used to pay off several high-interest debts with one low-interest loan.