How to Consolidate Secured Debt

Getting out of debt isn’t easy. For this reason, many people consider a secured debt consolidation loan. Consolidations are beneficial because they combine all your outstanding debts into one loan. Thus, you don’t have to worry about varying interest rates, payment amounts and due dates. There are many different types of debt consolidation loans. To ensure loan approval, it’s best to have collateral.

Difficulty: Moderate

Instructions

Things You'll Need:

• Personal credit report
• Bank lender
• Collateral

1. Check your credit report before applying for a loan. Although secured debt consolidation loans involve collateral, credit checks are necessary. What’s more, your credit rating influences the debt consolidation loan rate. Acquire a free credit report online, and check the report for inaccuracies and errors.

2. Apply for a home equity loan. If you own a home, a home equity loan or second mortgage can function as a secured debt consolidation loan. Contact a mortgage lender and discuss your options.

3. Choose the best collateral or security for the loan. If you don’t own a home, use a vehicle title, boat or other personal property as collateral for the debt consolidation loan. The property’s worth must be equivalent to the loan amount.

4. Determine which debts you’ll include in the consolidation. If your debt consolidation loan amount isn’t enough to include all your debts, consolidate the debts with the highest interest rate.

5. Compare debt consolidation loans and rates. Loans vary according to lender. Thus, it’s important to shop around and compare different loans and interest rates. Contact a loan broker or go online and request a no-obligation loan quote. Quotes contain information such as rate, term and estimated monthly payments.

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