A very high percentage of the people in western world have some degree of debt in their lives, and while some seem to manage it well and with no problems, others either find it difficult to manage well, or they have had circumstances come up that has already damaged their credit and may be pushing them toward bankruptcy. If that is the case for you, it would be a good time to give debt consolidation secured loans your serious consideration.
These kinds of bad credit secured loans are specifically designed to people who find that they are in credit trouble and are finding it tough to make the payments on all of their loans each month. This causes additional problems as late fees and over-limit fees start to mount as well, and if the budget was already tight to start with it doesn't take long before they find themselves in real serious trouble and possibly facing bankruptcy.
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The primary purpose of debt consolidation secured loans is not to add more debt to the situation, but to ease the problem by replacing a number of small-balance, high-interest credit card and loans with the new debt consolidation loan which typically has better terms and a better interest rate than the existing debts.
The reason the secured loan has better terms is because it is secured against some type of collateral, most likely a house or other type of high value property. This gives the lender some assurance, or security, that the loan will be paid, or in the worse case, that they can recover most of what you borrowed when they liquidate your property.
Most of the accounts you will be paying off with the consolidation loan will be high-interest rate credit cards, so by consolidating you should be able to lower your monthly payment and you will still probably be able to pay off the balance faster because of the difference in the rates, and other fees that the credit card companies are quick to add on to your balance.
Bad credit secured loans are the easiest type of new credit for someone with a low credit score to be able to get because of the collateral, and it is this aspect that also allows you to secure a lower interest rate, even with bad credit, than any other type of loan.
Many people have been able to avoid going into bankruptcy by utilizing a secured loan and paying off the small creditors that have gotten behind, rather than trying to negotiate with them to lower your interest rate or to waive fees.
With debt consolidation secured loans, there is still no absolute guarantee for the lender that the debt will be repaid, especially in the instance of people who are already having financial struggles and their credit problems are showing up on their credit report. Because of these factors, lenders do prefer certain types of collateral more so that other types.
Real estate is the most preferred type of collateral for secured loans because it more often than not goes up in value over time as opposed to depreciating as vehicles do. However, vehicles, such are cars and trucks, are also often used for these kinds of loans as well because they are fairly easy to place a value on them and sell them quickly.
It is best to use the collateral that you have that is of the highest value because the more value you use to secure the loan, compared to the amount you are borrowing, the better the interest rate you will be able to get for debt consolidation secured loans.
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