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Monday, October 06, 2008



Debt consolidation loans can be either secured or unsecured. A secured loan uses something of significant value to secure the loan amount. The most common source of security for such a loan is your home. Secured loans are less risky for the lender, usually leading to a lower interest rate and larger amounts available for borrowing. An unsecured loan is not secured against something of significant value, so it is much riskier for the lender. This type of loan usually comes with higher interest rates, smaller amounts available for borrowing, and often includes restrictions on how you can spend the money you receive. Features of secured debt consolidation loans are:

  • Secured debt consolidation loans require the borrower to render collateral to the lender. This helps the borrower to benefit from equity of his asset.
  • Secured debt consolidation loans carry a lower rate of interest, thus making them more attractive to customers.
  • Secured debt consolidation loans are repayable over a longer period of time, which may range from 10 - 30 years at affordable installments.


Unsecured debt consolidation loans are generally provided at comparatively lower interest rate. Unsecured debt consolidation loans are applied when unsecured loan rates are down in the market. So you can easily replace debts of high interest with a comparatively low rate unsecured debt consolidation loans. Interest rate matters but the convenience of paying the interest rates matters the most. Before you sign on for a "debt consolidation" loan, consider your alternatives:


  • Negotiate With Your Creditors - Sometimes your creditors will offer you a lower interest rate, or will waive certain fees associated with your accounts, if you simply call them up and ask. This is most often true of credit card companies.
  • Debt Management - You may be better served by utilizing a debt management service. With a debt management plan, you deposit an amount of money each month with a service which pays your bills for you. Sometimes creditors will work with your debt management service to offer reduced interest rates or waive certain fees associated with your account.
  • Using a Traditional Lender - You may also be better served by using a traditional lender, as opposed to a debt consolidation service.
  • Bankruptcy - There is a possibility that your best option is to declare bankruptcy. If all consolidation will do is forestall an inevitable bankruptcy, consider whether you will be better served by proceeding directly to bankruptcy.





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Current Mortgage Rates*

Loan Type
National Average
30-yr. fixed6.12%
30-yr. fixed jumbo7.62%
15-yr. fixed5.88%
15-yr. fixed jumbo7.12%
7/1 ARM6.38%
5/1 ARM6.25%
3/1 ARM6.00%
1-yr. ARM5.50%
1-yr. LIBOR ARM6.25%
10/1 ARM8.25%
40-yr. fixed7.12%
*Mortgage Rates Updated: 10/05/2008