What Is An Unsecured Debt Consolidation Loan?
As people go through life they accumulate bills usually in the form of credit cards or credit accounts with various stores and other institutions. People will also sometimes pick up small loans here and there that they needed for whatever reason and now they have all of these credit account monthly payments and loan monthly payments that can add up after a while.
Sometimes people may want to do an unsecured debt consolidation loan to bring all of these little payments into one big payment. An unsecured debt consolidation loan is a great idea, but there are things to consider before you even apply, and then there are also conditions your bank will want satisfied before they give you any kind of unsecured debt consolidation loan.
An unsecured loan is a loan that has no collateral backing it up. Basically it is a loan you are able to get on the strength of your credit, your income, and your bill paying history. Needless to say that if you know you have bad credit then the chances that you will get an unsecured debt consolidation loan are very small.
It never hurts to ask but do not be surprised if you get turned down. However if your credit is in good shape and your income exceeds your monthly debt by a healthy margin then you may be okay. You may also want to consider establishing a relationship with your bank beyond just a checking and savings account to help in this process. A bank is more apt to give you an unsecured debt consolidation loan if you have credit cards or have done other loans with them.
What You Can Expect And Who You Should Talk To
If you are applying for an unsecured debt consolidation loan and it is one of your first loans like this then you may not get as much money as you need. You then have to weigh the advantages of paying only part of your debt down versus just leaving it as it is. You will also want to compare interest rates.
If all of your credit cards and other loans are at a significantly higher interest rate than the unsecured debt consolidation loan you are being offered then the loan is probably a good deal. You can also add up your monthly payments you are making now and compare them to the monthly payment for the loan. If there is enough of a monthly savings then that is another reason to consider the loan.
Banks are fine but if you can establish a relationship with a credit union then you stand a much better chance at getting financial advice and help you need. Credit unions are able to work with you through a different set of laws than a bank and they will listen to you long before a bank would.
