When loans, bills & other expenses are exceeding, we fall in debt. We are trying hard to repay those loans & bills, and we take more loans in spite of repaying the earlier debt with the hope that we will cover it. Finally we can’t repay it & we take help from the financial adviser from any debt consolidation companies & debt settlement companies.
We take Debt consolidation loan means a loan & it covers your all debt that we are having. All credit card debt & loans that we have are merged into a single debt consolidation loan. Instead of paying all individual debt, you can pay to you debt consolidation company as per the deal with your debt consolidation company. This is the benefit of debt consolidation loan.
In this case on behalf of you, an executive will face to creditors from your debt consolidation company & they will pay to them. And in this way you are not facing the nagging of you creditors.
Now the question is how many types of debt consolidation loan you can borrow?
There are 2 types of debt consolidation loans:
- • Secured debt consolidation loan.
- • Unsecured debt consolidation loan.
It’s very easier to get a secured debt consolidation loan. Because you are providing a guaranty for the amount that you borrowed from the debt consolidation company. In this case guaranty can be an asset like your home, bank account or your favorite car. With this you can borrow as much as you need because you are providing collateral to them. But if you are unable to pay the amount at the end, your debt consolidation company has the full right to take over your asset whatever you provided as a security. That’s why in this case you will get much amount with lower interest rate than the unsecured debt consolidation loan.
And in other side your debt consolidation company hardly sanctions the unsecured debt consolidation loan as you are not proving any guaranty or security there. Yes, for you it’s safer than secured debt consolidation loan but the interest rate will be so high and you will not be getting as much you need. Your debt consolidation company will try to allot a lower amount than what you ask for. Because in this case if you are unable to pay it there will not be that much loss. And interest rate will be so high, so that they can receive more money from you through the monthly payment.