Is It Always Better To Get A Debt Consolidation Loan Secured?

An average person has to be responsible for both family and social obligations

. He has to manage money to educate his children. He is responsible for the family's bread and butter. He has to pay monthly utility bills, credit cards, personal loans, auto loans and many more. How much can he save for future expenditures that are likely to occur, such as the marriage of his children or for the construction of his dream home? The result: he gets loans; sometimes long term loans, sometimes short term loans. The condition may be worse when this person is not in the position to get a debt consolidation loan secured.

What is a debt consolidation loan secured? Let us first understand the term "debt consolidation loan". A debt consolidation loan is a single loan that you take from any financial institution such as a private or public bank, or some other government financial management department. This loan eases the payments on all the loans you have taken out. Now you do not have to juggle multiple payments on different dates. You have to make only a single easy installment payment every month. The amount of the payment depends on the type of debt consolidation loan you have; i.e., debt consolidation loan secured or unsecured.

If you choose the debt consolidation loan secured format, then you may have the option to pay back your debt consolidated loan over a long time period, even as much as 25 years. In this instance, the amount, you pay each month as an installment will be less so that you can make your payments without over-extending your pocket or your mind. You may even be able to get a secured debt consolidated loan if your credit score is bad. Some drawbacks of the secured debt consolidation loan are as follows:

1. You will have to sign an agreement with the lender to keep your movable or immovable property with the lender.

2. You may lose this property if you fail to pay the debt consolidation loan secured installments on a regular, agreed-upon basis, although this repossession happens rarely.

3. You will have to pay a larger amount as interest on the debt consolidated loan.

4. You will have to make payments for a longer term, which means the loan burden remains for a longer period of time when you use a secured debt consolidation loan.

5. You may not be able to get a debt consolidation loan secured if you have no property that can be used as collateral.

Some precautions you should take when getting the debt consolidation loan secured are as follows:

1. You should decide carefully on the collateral to use, as you may be deprived of it if you fail to make installment payments regularly.

2. You should choose a lender after comparing interest rates, terms and conditions, and reputation in providing the debt consolidation loan secured.

You should search in your area for a reputable lender and choose one after consulting with your friends or family members.

by: Allen Jesson

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