Eliminating debt is not an easy task. For this reason, many people
carry high credit card balances for several years. Homeowners may take
advantage of home equity loans or refinancing to reduce debts. In addition,
persons with a vehicle title or collateral may obtain a secured
personal loan to payoff debts. However, there are also options for eliminating
debts that do not require collateral.What are Unsecured Debt Consolidation Loans?In a nutshell, unsecured debt consolidation loans are personal loan
that do not entail collateral. Prior to a lending institution such as a
bank or credit union approving a loan request, the applicant must submit
some sort of collateral. Typical collateral includes a vehicle title.
Hence, if the loan is not paid, the lender may claim the applicant’s
property.Because unsecured debt consolidation loans are not protected, they are
harder to qualify for. Each lender has a different criterion. However,
most lenders require good credit and a sizeable income.If you are hoping to become debt free, a debt consolidation loan is the
answer. Although unsecured loans carry a higher interest rate, the rate
is considerably lower when compared to credit card rates. Moreover,
debt consolidation loans have fixed terms.Other Debt Consolidation Options without CollateralAgain, qualifying for an unsecured debt consolidation loan is tricky.
Some lenders do not offer these types of loans. Furthermore, the lenders
that do offer unsecured debt consolidation loans have strict lending
requirements. Unfortunately, it’s impossible to get approved for an
unsecured loan with poor credit. In this case, you may have to explore other
alternatives.If a home equity loan or refinancing is not an option, you may consider
transferring your high interest balances to a low rate credit card.
This will lower monthly payments and make is possible to reduce debts.Another option involves consolidating debts through a credit counseling
or debt management agency. These agencies negotiate lower interest
rates, and consolidate debts without collateral or credit checks.If using such an agency, you will be placed on a payment plan. Because
debts are consolidated, a single payment is submitted to the debt
management agency each month. These companies are very effective, and can
help you become debt free in five to ten years.