Is it part of your everyday life to be hounded by calls from creditors? Are you neck deep in debt and afraid that you are going to completely sink? If you are hoping to find that one thing that will help you get out of debt… don’t look too far because the answer is just here. A debt consolidation loan is one, which will help you break away from the circle of debts and give you a chance to think of a debt free future.

Broadly speaking, there are two types of debt consolidation loans – secured and unsecured. While secured loans require a collateral (e.g. house), unsecured loans do not need any such guarantee. Let’s take a deeper look into unsecured debt consolidation loans.

How does the unsecured debt consolidation loan work?

An unsecured debt consolidation loan is one does not need any collateral. It looks to consolidate various small loans and make it one bigger loan that will be easier to pay off. This loan would cover everything from medical bills, house bills, credit card bills, automobile loans and the like. All these loans will be made into one single loan that will be easier to manage.

One good example of unsecured debt consolidation loan is credit card balance transfer (wherein you transfer balance from multiple credit cards to one credit card and get the advantage of low APR on the new credit card). It is however important to note that that the unsecured debt consolidation loan does not cover secured debts.

The advantages of an unsecured debt consolidation loan are:

1. Reasonable rate of interest: The rate of interest on a debt consolidation loan is usually much lower than what you would have to otherwise pay (otherwise the consolidation loan will not make sense). You credit history determines a large part of how low your interest will be. A good credit history can make a significant difference to the amount of interest you need to pay on this consolidation loan.

2. Just one payment every month: Since all the loans are consolidated into one single loan, there will be only one payment that needs to be made every month. This reduces the hassles of keeping track of all the bills and their deadlines month after month. Faltering these deadlines would also result in penalty and furthering the financial burden.

3. Stress buster: No more annoying calls from credit companies, month after month demanding payment.

4. Faster processing: Since it is an unsecured loan the loan is processed really fast. You can start working on a debt free future immediately.

5. Reduced hassle: Less documentation is required for unsecured debt consolidation loans. That makes it easier for you.

6. Reduced burden: It relieves a lot of financial burden by lessening the rate of interest and/or giving more time to pay off the debt; thus making the monthly payments more feasible. A lot of over the limit charges and various other fees are also withdrawn.

These are some of the benefits offered by unsecured debt consolidation loans. If you just give it one hard thought, you will come up with your own personalized benefits too.

Author Bio: Article written by Svilen Andreev, Founder of Smart Debt Solutions, Inc. For more specific information about unsecured debt consolidation loans or just for general information about debt consolidation check out his website at http://www.smart-debt-solutions.com

Category: Finances
Keywords: unsecured debt consolidation loan,debt consolidation loan,debt consolidation,debt