How to Get a Debt Consolidation Loan

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How to Get a Debt Consolidation Loan

There are two ways get debt consolidation-or more specifically, there are two kinds of loans to get: unsecured and secured.

"Unsecured" means that a lender is going to give you a loan on good faith (like a credit card).

"Secured" means the lender has something to get if they don't get their money.

Using a home mortgage (or more specifically, home equity) as collateral is a way to get a secured loan. Since the loan is secured and therefore less of a risk to the lender, secured loan borrowers are likely to get better interest rates.

Furthermore, unless the borrower has excellent credit and can refinance their debt through other unsecured loans (for example, transferring high-interest credit card balances to lower-interest cards), borrowers are again likely to receive better rates with a secured loan. With the additional possibility of getting a tax write off on the interest.

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