subject: Debt Relief Options - Unsecured Debt Consolidation Loans [print this page] Unsecured debt consolidation loans are the loans given to customers without any collateral. Not having collateral is what makes it "unsecured". It is very common for people to misunderstand and think that an unsecured debt consolidation loan is simply a debt consolidation loan. Unsecured loans, as the name states, are not secured.
No collateral has to be given for unsecured debt consolidation loan, and a normal debt consolidation loan requires some collateral or promissory note to be submitted. In case the payment for a debt consolidation loan is not made, the lender can seize the property or home whatever has been kept as collateral. Unsecured debt consolidation loans do not carry this risk but are correspondingly harder to find.
Credit union or banks usually provide unsecured debt consolidation loans to customers who have good credit ratings and a high income. Credit unions often offer lower credit interest rates than banks. A good credit rating and a high income indicate to the creditors that their money will be paid back with a consistent single monthly payment. The loan also consolidates all the customer payment for credit card bills, tuition fees and medical bills into a single monthly payment and the customer is relieved from keeping up with different payment schedules and different banks.
There are few banks that offer credit cards, which carry no interest during promotional periods; many consumers use these companies to lower their payments temporarily. This could also work as an unsecured debt consolidation loan but here the drawback is that if a single payment is missed, the bank usually charges a heavy penalty. Moreover, if all charges have been transferred to a single lender, default can carry a heavy penalty and subsequent collection efforts can be severe.
There are some non-profit organizations that also help in such a situation to negotiate a lower interest rate from different creditors. They even offer debt management programs for people to come out of the debt trap by following a consistent payment plan against a debt consolidation loan and, by providing insights into money management, to avoid such traps in the future.
Consolidation Loans provides detailed information on Consolidation Loans, Debt Consolidation Loans, Unsecured Debt Consolidation Loans, Cheap Debt Consolidation Loans and more. Consolidation Loans is affliated with College Loan Forgiveness.
