Explain Unsecured And Secured Debt Consolidation Loans
Debt consolidation loans can be split into 2 major categories, Unsecured and Secured loans. Typically in a secured debt consolidation loan a collateral is pledged to make the creditor minimize his risk exposure and is offered at a lower interest rate. A common collateral could be a car or a house and in some cases shares. If the borrower defaults he or she stands to lose the collateral pledged. An unsecured Debt Consolidation loan on the other hand is offered based only on the borrowers monthly income. Since the risk is higher for the lender, the interest rates will be slightly higher than that of a secured loan.
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