Secured and unsecured consolidation are the two types of debt consolidation, each having their own features. Secured loans are required collateral security, such as your property, house, etc. While unsecured loans would not seek any kind of collateral security. This way, you can be free of any fear of losing your property if you fail to pay off the loan. As, both types have their own advantages as well as disadvantages, they are equally popular among borrowers in UK.
But when talk arise which one between the two is more beneficial, secured way of consolidation loans would definitely stand first. Though you are supposed to put any of your property as collateral security, yet the deal is lucrative due to its several advantages. The most important advantage of its is that not only you are free now of paying multiple debts, but also through it you avail the loan on low interest rate. Availing debt consolidation through Secured Loans may cut your interest rate to 30%.
Moreover, as you have put your home as collateral security, the repayment period is going to be longer; and likewise monthly instalment will be smaller. For borrowers having adverse credit record, availing secured loans form of debt consolidation appears to be boon. As, they are putting their home as collateral, they get the loan easily which helps them paying their loans off leading them to good credit score.
Ibrahim F
February 17, 2009 at 10:27 am
A consolidation loan for $100K to $200K generally is secured by a person's home. For your 2nd question, Home Equity loans are a little different from a line of credit. The Home Equity loan is a lump sum loan. For exampled if you applied and got approved for a $50K loan , they would give you the $50 all at once. The line of credit is really designed for you to use when you need. Generally you only be taken a few thousand at a time. Since the risk is greater for a lender to lend out $50K all at once, that's why the rate is higher.
Quez
February 17, 2009 at 10:38 am
You can find the secured debt consolidation loan easily.
First it should have rates on secured loans are lower.
Next it should have smaller amount of monthly payment.
Ability to borrow to another amount.
It should not have longer repayment terms.
It should not have high risks if unable to maintain payment.
medievalprincess80
February 17, 2009 at 12:38 pm
Nicole D
February 18, 2009 at 12:17 am
Yes as long as you have the account number they will get in touch with each creditor. But just as the personabove me stated consolidation IS considered a from of bankruptcy and NO ONE will approve you for anything while you are on it. I wasn't told this when I did it..found out from a car dealership. So if its substantial, you may want to file bankruptcy where you do not pay it back.
sfcjtgoff
February 19, 2009 at 1:32 am
A consolidation loan is the worst thing you can do. I take it you already have a job, so If I were you, I would get a part time job and use that money to payback your debts. This may take a while but atleast you know that the money is going directly to the company and not in somebody else's pocket.
Stephanie B
February 19, 2009 at 5:34 am
Of course. It is secured against your equity thus reducing it. It will not necessarily impede your ability to refinance but it will affect the terms and the rate. This should not mean that the debt consolidation loan should be considered bad. It may reduce your monthly expenses thus exerting a positive affect on a decision regarding a refinance. Find and consult a good financial adviser before making a decision on either or both loans.
Diya
February 19, 2009 at 11:12 am
taz m
February 19, 2009 at 3:26 pm
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good luck!
Maftuna
February 20, 2009 at 5:43 am
The main type of debt consolidation is the consolidation loan that can either be offset against a form of collateral, ie your home (secured loan) or a standard consolidation loan that you will need a reasonably good credit score to be approved. This is generally called an unsecured loan. An unsecured loan would be the most preferable as you are not risking your home or whatever you have financed the loan against should something unforeseen happen that makes it impossible for you to keep up payments.