Secured Debt Consolidation Loan – an Ideal Solution for Credit Restoration

If you are piled up with debts and looking for a solution to get out, your search is over! Secured debt consolidation loans can do it for you. A secured debt consolidation loan will consolidate all your debts into one single loan. And if you make your payments regularly on the consolidation loan, you are bound to improve your credit rating and hence make yourself eligible for more credit.

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Secured debt consolidation loan: an introduction

Secured loans are a particular type of loan which requires debtors to pledge their assets as collateral/guarantee against the loan amount. Secured loans come at lower interest rates than unsecured loans and you can also negotiate better terms on a secured debt consolidation loan. Home equity loan or a remortgage loan is a good example of secured debt consolidation loan where the home/property is the collateral. So, many people prefer this type of loan because of the benefits attached to them. For creditors too this is a less risky proposition because collateral is attached to the loan.

Secured debt consolidation loan: the benefits

Here is a quick list of benefits from secured debt consolidation loans:

  • Consolidate your bad debts into a single payment, making it very convenient to manage.
  • Better interest rates and favorable terms and conditions as compared to unsecured loans.
  • Quick and easy loan approval process means you save time and effort.
  • Even those with a history of bad credit can get it because lenders cover their risk through collateral.
  • Flexibility in repayment terms is a very big benefit.
  • Hassle-free loans that make your life simpler.

How to search for the best creditors in the market?

The financial market is flooded with array of companies that offers secured debt consolidation loans. But how do you know whether a company is genuine or not. For this, you just need to follow some simple tips:

1. Hunt for a debt consolidation company which is certified and has a great reputation (you can check with family, friends, and colleagues to verify the credentials or ask the company to provide references you can contact and take a feedback from).

2. Search on internet for more information about the company and try to contact its previous or existing customers and verify with them the credentials of the company.

3. Never ever reveal your crucial personal information to any company unless you are sure that you can trust them.

4. Check the services that the company is offering and make a note of the interest rates, repayment terms and other privileges it is offering to its customers. You can then compare these with the offerings from other lenders.

Secured debt consolidation loans have a risk element too

Every coin has two sides and this principle applies to secured debt consolidation loans too. It is important for you to first understand the risks associated with secured debt consolidation loans, analyze its repercussions and then go for a secured debt consolidation loan. Since collateral is required for secured debt consolidation loans, any default or non-payment of the consolidation loan might mean losing your assets permanently. So, the decision to go for a secured debt consolidation loan should not be a hasty one.

Choosing the right secured debt consolidation loan

While looking to consolidate your debts, you will need to assess your short and long term financial situation; and you would also need to work out the amount you can afford to pay on your home loan. This will help you choose the right debt consolidation loan. Here is how you should go about this:

1. List all your debts with the outstanding amount, interest rates and monthly minimum payment.

2. Prioritize your debts and prepare the order in which you should pay them off. You can even take the help of a financial consultant to figure this out.

3. Calculate the total amount of loan that is required to pay off the debts completely.

4. Once you have the figure, draw a rough estimate of the monthly payment that shall be paid against the loan.

5. Assess your short and long term financial situation i.e. any planned expenses, expected pay hikes, job stability, addition to family etc.

6. Taking the above into consideration, find out the amount of monthly payments you can afford to make; and accordingly negotiate a secured debt consolidation loan that will suit you.

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