An Unsecured Consolidation Loan is a loan you can obtain without having to put up any assets as collateral. It is called an unsecured loan because the loan isn’t backed or secured by any assets. If you have good credit and a decent amount of income each month, than an unsecured loan may be a great way to consolidate your debts.

The downside to an unsecured loan is that you first need to qualify. In order to qualify, lenders will look at your debt load and how much money you make each month. If the amount of money you make each month is close to the amount that you owe in bills, then chances are no one will be willing to lend you more money. By combining all of your smaller debts into one large debt, you can become a large risk to a single potential creditor. Unless you are able to put up some assets as collateral, the odds of you being able to borrow enough money to cover such a large balance are probably not that good. The larger the combined amount of your debts, the harder it is to obtain an unsecured loan to pay them all off, and the higher the interest rate on the loan will be if you do. If you don’t qualify for a low interest rate, you could end up getting charged up to 24% or higher, which is really no advantage to you and becomes just like a regular credit card. For the reasons listed above, we only recommend an unsecured consolidation loan if you can obtain a low interest rate.

Remember, you most likely got into this financial situation in the first place by borrowing too much money at unfavorable terms, so if you plan to get an unsecured loan, the key is to make sure that it is at a better interest rate than you are currently paying. At the end of the day, you will owe the same amount of money that you did to begin with, just hopefully at a more favorable interest rate.

At S.J. Packman & Associates, before we make any recommendations, our attorneys, certified debt specialists, and paralegals, are trained to ask the right questions to find out about your specific situation. Based on your current income and your financial hardship, we will determine which course of action will work best for you. We do not only offer one path, as there is no one process that can solve everyone’s needs. We will take our time with you and help evaluate what your best course of action should be. Call now and one of our advisors will be there to get you started on your path to financial freedom. There is no obligation to enroll, so don’t delay.