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Are Unsecured Consolidation Loans Right For You?

Jan 27, 2008
You do not need to risk collateral in order to get an unsecured consolidation loan. That is why there is always such a market for them.

Unsecured consolidation loans are perfect for people who do not wish to risk their valuable assets as collateral when getting a loan. They are also good for renters, or other people who do not have collateral.

Like with other consolidation loans out there, unsecured consolidation loans can help get you off to a good start on the path to financial freedom. These loans combine all of your existing debts into a single account. These loans carry higher interest rates than secured loans, but the interest is still lower than that of your current debts.

Unsecured loans, as their name implies, are not secured by collateral like homes, cars, or boats. In order to obtain one of these loans, you do not even have to own such properties. The two main criteria for obtaining an unsecured debt consolidation loan are a good credit rating and the ability to prove that you can repay the loan(a good employment history).

These minimal requirements are the bright side of these loans. On the other side of the coin, these loans also carry higher interest rates than secured loans.

Regardless of the difference in interest, more people still opt to get unsecured loans so that they can try to resolve their debts without jeopardizing their homes or other properties. If you already have a good credit history, it is wise to consider consolidating your debts before you default on a loan or miss payments, so that your credit will be sufficient enough to obtain the loan.

Your ability to repay an unsecured consolidation loan is determined by your current employment status as well as your past employment history. These things show a form of proof to lenders that you will be able to repay any credit loaned to you.

There are a great deal of lenders on the market today. Despite this fact, it is almost impossible to get an unsecured consolidation loan without both a good credit rating and a strong employment history.

Each loan provider will take a different amount of time determining your eligibility for an unsecured loan. Some lenders can provide you with an instant decision, while others will want to do a little bit of research before making a determination. Knowledge of your own credit report, however, will help you assess quickly whether or not you will likely be approved. Two red flags that usually result in application rejection are loans that are in default status and a history of missed loan payments.

Because credit reports are not always fully accurate and can often report negative items, it is wise to check your report after each loan you pay off to ensure that it has been removed. By doing this, you increase your ability to prove that you are worthy of credit when being considered for a loan.

If you have substantial debt, you are still credit worthy for unsecured loans, and can apply for that kind of loan with your prospective lenders. Just remember to keep your credit report and proof of employment on hand to prove your eligibility for such loans.
About the Author
Searching for advice on debt consolidation loans , credit card consolidation or any kind of loan consolidation? Consolidation Loans Advice is a massive resource for information on all aspects of loan consolidation. Get the facts.
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