Debt is a problem that everyone faces at some point in his or her life. The solution to a debt free life lies in the choices one makes to counter the debt, curb spending and reduce bills. Another way to counter the debt threat is by consolidating all the loans into one single secured debt consolidation loan. This is one complete debt that will pay all other smaller debts and make life less complicated (besides saving you money and helping ease out the debt stress).

What is a secured debt consolidation loan?

A secured debt consolidation loan is a loan that is generally taken against a property (real estate). The debtors will mortgage their property (generally home) as a guarantee or collateral against the loan they have taken. Home equity loans, re-mortgage loans are some loans that can be taken as a secured debt consolidation loan. They will have a house or property as collateral for the loan.

Secured debt consolidation loans are by far the most preferred loans for various reasons:

1. Rate of interest: The rate of interest on a secured debt consolidation loan is significantly less than that of an unsecured loan. The reason for this is quite obvious – since the lender is providing loan against a property, if you fail to pay back the loan, the lender can sell the property and retrieve the loan amount. As interest rates are linked to risks on a loan, the lenders are able to offer lower interest rates for secured loans.

2. Better terms and conditions: Again, since the loan is taken against a property as a guarantee, the terms and conditions on these loans are more lenient. You can also dictate to an extent what exactly you want the terms and conditions to read.

3. One single debt: The secured debt consolidation loan will be one debt that you need to pay off to get debt free. All your smaller debt may have repay dates and penalties if you over stretch the deadlines. All this will be history once a consolidated loan is taken.

4. Get it even with a bad credit score: If you have a bad credit history, there is a chance that lenders might turn you away. But with secured debt consolidation loans, the property you show as collateral will pose as a guarantee and credit companies might give you the required loans. However, if your credit score is bad then the terms might not be as favorable as with a good score.

5. Flexibility: One of the biggest advantages of these loans is the flexibility they offer in paying back the loan amount.

6. Longer time to clear the debt: Besides lower interest rates, you might also get better repayment terms i.e. you might get a longer term loan thereby further reducing the monthly payment amounts. But note that longer term also means that you would be paying more interest on the total amount (as compared to a loan that is repaid over a shorter time period).

Despite these advantages one must remember that secured debt consolidation loans hold assets or property as guarantee. Any default in payment can mean that you may lose your assets forever. It is important to research the deal well and makes sure it is the best one for you.

Author Bio: Article written by Svilen Andreev, Founder of Smart Debt Solutions, Inc. For more specific information about secured 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: debt consolidation loan,debt consolidation,debt,secured debt consolidation loan