Debt Consolidation Options That Don’t Require Collateralby Tim Saighani Finance Manager
If you have reasonable monthly expenses and good income, it’s advisable to seek debt consolidation options that don’t require you to offer your lender collateral – that is, offering up your home, a vehicle, or other property to secure your loan in the event you default on your monthly payments. Generally, a debt consolidation loan that is unsecured – that is, does not require collateral – is a great option because you won’t risk losing your assets if you miss a payment.
Unsecured loans generally carry higher interest rates, since the lender is not guaranteed the recourse of seizing and levying your assets if you default. Nonetheless, many consumers still prefer to pay the increased interest amount over risking the loss of their property. Fortunately, there are several options for consumers who prefer to seek an unsecured debt consolidation loan, from using a balance transfer to seeking an unsecured personal loan.
There are several debt consolidation options available that don’t require you to offer your lender collateral. Here are four of the most common ways to avoid secured debt consolidation loans.
- Balance transfers – A balance transfer option allows you to shop around for a new credit card – preferably with a lower interest rate – and then transfer all of your outstanding balances to that new card. From there, you will make one single monthly payment to your creditors.
- Unsecured personal loans – If you have good credit, seeking a personal loan from a bank, family member, friend, or colleague may be a viable option. Unsecured personal debt consolidation loans typically carry interest rates starting at around 10 percent, so they are generally lower than most credit card interest payments. However, if you pursue this option, avoid the temptation to run up your credit in the meantime, as this will land you in the same challenging position all over again.
- Credit counseling – Enrolling in a credit counseling program can help you not only to pay off your debts but also maintain a budget and create a financial plan to help you avoid falling into the same debt trap in the future.
- Optimizing your monthly payments – This is the best way to avoid a secured debt consolidation loan. Whenever possible, make fixed payments in excess of the minimum payment amount each month. By doing so, you will pay less interest over the life of your debt consolidation loan, saving you thousands of dollars in the long run.
If taking on secured debt and risking the loss of your home, vehicle, or other property isn’t the best course for you, you have options. At Countrywide Debt Relief, our team is skilled in helping consumers like you navigate their burdensome debts by exploring their debt relief options. We are equipped to help you get on the right path toward financial freedom. Reach out to us to set up a consultation or to learn more about your debt relief options.
Created on Jun 27th 2019 05:16. Viewed 116 times.