Unsecured debt consolidation loans are loans obtained from a bank without the provision of collateral. Such loans are availed to pay off credit card debt or medical bills. Normally, debt consolidation is undertaken to reduce and eliminate debt by paying off a high-interest unsecured loan, like credit card debt, with a low-interest secured loan, like a home equity line of credit. Debt consolidation thus helps lower interest rates, which in the long run helps eliminate debt faster.
Unsecured debt consolidation loans are not secured by any collateral, like a home or a car. These are mostly in the form of personal loans. Personal loans are one way of paying off credit card debt if one does not own a home or a car. Many banks offer such plans for their customers who have a satisfactory banking history with them. However, interest rates on unsecured personal loans would be higher than those on a secured home equity line of credit.
Usually, the amounts disbursed as unsecured debt consolidation loans are lower than what they would have been if the debt consolidation loan was secured. Wells Fargo Financial, for example, offers its customers home equity lines of credit for debt consolidation starting at $10,000, whereas unsecured personal loans for debt consolidation are capped at $10,000. So unsecured debt consolidation loans are essentially for those individuals who carry lower credit card debt but still want to consolidate it and eliminate it completely.
While an unsecured debt consolidation loan is a good way to pay off high-interest credit card debt, very often individuals end up a few years later with similar credit card debt and the added burden of paying off the personal loan. The critical element of debt reduction and elimination is to keep a check on one’s spending. There are secured and unsecured debt consolidation loans available to help one out of debt, but the process must start at the individual’s level.
Please one more PV Before Get Code