Top_5_Advantages_Of_Unsecured_Debt_Consolidation by gedankendeus

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									Title:
Top 5 Advantages Of Unsecured Debt Consolidation


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534


Summary:
One of the advantages of an unsecured debt consolidation loan is that since there is no property valuation
involved in sanctioning the loan, these loans are approved faster. This saving in time also saves in any debts
that may keep on adding through its interest. However, to get an unsecured debt consolidation loan, it is
important that the borrower be clean on the credit front as the credit history helps the lender determine the
credibility of the borrower.



Keywords:
unsecured debt consolidation,secured debt consolidation,debt consolidation,debt consolidation loan



Article Body:
Debt consolidation is the process where multiple loans are replaced with only one loan that has a lower
monthly payment scheme but a longer repayment period. There are basically two types of debt
consolidation; secured and unsecured. In secured debt consolidation, some asset is placed as collateral for
the debt consolidation loan. If the borrower fails to repay the loan, then he or she stands to lose the
collateral.


In unsecured debt consolidation, no asset is used as collateral. So there is no fear of the lender having any
direct charge on the borrower’s home in the event of non-payment of the consolidation loan. Here, if
repayments are not made, the borrower has the privilege of re-negotiating the repayment with the lender.
There is no fear of the collateral being lost through non-repayment of the unsecured debt consolidation loan.
However, the interest rates of these consolidation loans are usually on the higher side.


One of the advantages of an unsecured debt consolidation loan is that since there is no property valuation
involved in sanctioning the loan, these loans are approved faster. This saving in time also saves in any debts
that may keep on adding through its interest. However, to get an unsecured debt consolidation loan, it is
important that the borrower be clean on the credit front as the credit history helps the lender determine the
credibility of the borrower. This is because the loan providers may fear sanctioning loans to borrowers with
a bad credit history, and with no collateral pledged.


However, this does not mean that a person with bad credit will be rejected an unsecured debt consolidation
loan. Nowadays, there are many loan providers who are willing to take a risk with lending money to people
with bad credit. This is because they now believe that bad credit is not an absolute indicator of credibility.
One of the disadvantages of an unsecured debt consolidation loan is that the borrower cannot draw as large
an amount as the secured debt consolidation loans. This is so as to cover the risk of giving a loan without
any collateral. However, if the lender has enough faith in the borrower, then there is a chance of him loaning
him a greater amount in the unsecured debt consolidation loan.


The specialty of an unsecured debt consolidation loan or any debt consolidation loan is that the loan
provider actually designates experts who work along with them to eliminate debts. Here the borrowers only
have the task of performing the debt settlement process. They have to provide information of the various
debts they want settled; this has to include all big and small debts. The reason all the small debts have to be
included is that the borrowed amount does not increase much with its inclusion, and these small debts add
up to a big amount with its interest.


Once the information of the debts is provided to the loan provider, then their trained representatives will
handle the several creditors of the borrower. This is a relief to the borrower, after all that haggling with the
creditors. Good representatives can in fact bring down the repayable amount and thus save on the unsecured
debt consolidation loan.




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