Are you in severe debt and want to pay off your creditors? In such circumstances, you can opt for consolidation of loans, in which you have to take a loan larger than the amount you owe to all the lenders together. You can especially go for a secured debt consolidation.
Secured Debt Consolidation – Features
- When you consolidate your debt with the help of a loan and secure it with the help of an asset, it is called a secured debt consolidation. Depending upon the preferences of the creditor you might have to secure real estate, jewelry, personal stuff or stocks & bonds as collateral in exchange of the debt consolidation loan you are about to take. This type of consolidation is applied when the individual who wants to consolidate debt does not possess credit which is acceptable for availing an unsecured loan.
- Secured debt consolidations are most useful for people who have marred their credit ratings by slow payment or other issues. This kind of loan is a risk to the lender; therefore, the rate of interest on the loan is going to be higher than unsecured loans that are issued to people who have better credit ratings. There are, however, some competitive rates on the secured loans that are reasonable and are therefore, attractive to the borrower.
- As per the attributes of the assets available for utilization as collateral, getting hold of a debt consolidation loan can be quite easy. Several financial institutions and banks readily accept real estate as appropriate collateral for this type of loans. You can also come across lenders who accept bonds and stocks when an unsecured loan is not possible to be rendered.
- Finding lenders who accept jewelry, electronic goods or other assets is a little difficult. These personal properties hold their value as long as the loan period exists. You can however, avail the services of private foundations that sometimes take in such personal properties as collaterals. Banks that cannot take in non – traditional collateral, often suggest the names of one or more lenders that may fit your needs.
- In most cases, the present market value of the asset should exceed the total amount taken as loan that includes the project interest. This will assist the lender in covering any remaining balance that is due on the loan. It also covers expenses that are linked with compensation and recovery, if you fail to repay the entire amount of the loan. As long as the loan period exists, you cannot sell the collateral without permission from the lender.
Research
When you are looking for a secured debt consolidation company, it is important that you do some research. You should go through debt consolidation reviews and learn more about different companies that provide unsecured loan for consolidating your debt. Do not go with the first lender that you come across. You need to compare the rate of interest and the monthly payment amount. You should also compare the terms and conditions that are offered by different lenders. This is going to enhance the opportunities of getting the best deal on the loan that you are taking for consolidating other loans. It is also going to make the repayment process more beneficial for you.
Therefore, whenever you want to consolidate a loan, go for secured debt consolidation. You can secure a personal property as a security, real estate or even stocks. Most lenders are okay in accepting real estate. There are, however, very few lenders who accept personal assets, such as electronics and furniture. You should also do some research before choosing a particular lender for secured consolidation of debt