For example, if you borrow money against your car, you’re using your car as collateral.
It reduces the risk for the people lending to you because they can repossess your car to pay your debt if you can’t make the loan payments.
You should get free debt advice before you consider taking out a secured debt consolidation loan, as they’ll not be right for everyone and you could just be storing up trouble or putting off the inevitable.
Before you choose a debt consolidation loan think about anything that might happen in the future which could stop you keeping up with repayments.
While consolidating debt often sounds like a promising solution, this could make your situation worse.
Lending Club is the nation’s largest peer-to-peer lender.
There are two types of debt consolidation loan: Debt consolidation loans that are secured against your home are sometimes called homeowner loans.
You might be offered a secured loan if you owe a lot of money or if you have a poor credit history.
When you consolidate debt, you combine several loans into one loan. The easy way to consolidate debt without collateral is to use an unsecured personal loan that offers you lower interest rates with no collateral requirement. They may be paying off student loans, medical expenses, or credit card balances.
They may need to finance a major purchase that can’t be paid for with their normal cash flow.