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Guaranteed Installment Loans For Bad Credit The Pros And Cons Of The Unsecured Consolidation Loan

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04-Aug-2019 11:33 AM

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Have you been left in the position of needing to look into getting an unsecured consolidation loan just to get by this year? Whoever coined the phrase about the only certainties in life being debt and taxes obviously hadn't heard of a credit crunch and crippling debt.

In this article we're going to have a look at how to get rid of all of the small amounts of money that you have going out each month, and how consolidating them into one loan can really help you. We'll also be looking at what to do if you're in a position where you need to think about an unsecured consolidation loan as a viable option.

How does having one loan to repay per month help you out?

The first thing to look at is the interest that you're repaying each month on the loans you currently have. Although they may not seem like large amounts, by the time you've repaid them you may well find that you've had to pay back as much as three times the amount of the original loan.

The obvious answer is not to take out the loans in the first place, but, with the way the economy has been over recent years, this is not always an option for some people. So what should they do?

If paying off the debts (with the highest interest) using money you have in savings is not possible, then you need to look at getting a loan at a much lower interest rate, and the unsecured consolidation loan has become people's method of choice when it comes to doing that.

The advantage of having the debt in one place is the fact that you can get the repayment date moved to something that will suit you better - unfortunately that doesn't mean you can tell them you'll start paying them in ten years - so you should be able to set the day the money comes out to a day after you've been paid.

If you can organize the payment to come out after you've been paid, and after the rent of mortgage has been paid, you can better organize the budget that you should have up and running.

What do you need to do if you have to get an unsecured consolidation loan?

If you don't have much (or any) money in the bank then this may be the best option for you. These types of loans are generally quicker and easier to get, but they do have one or two disadvantages.

First the loan company will take into account your circumstances before giving you a guaranteed unsecured consolidation loan, which is not uncommon when taking out any type of loan. However, because they aren't lending you money that you already have and can pay back at virtually any moment they need to look at your employment, and the history you have of making repayments to the companies you owe money to.

The key disadvantages are these; not everyone has a job, and therefore a clean history of repayments; the loans are usually for a much smaller amount, meaning you may not be able to get enough to repay everything you need to; theterrible credit payday loans have to be repaid over a much shorter time than you may have been repaying the other borrowings; and finally, because your status isn't as good as it could be, and thenon payday loans for bad credit are for a shorter period, the interest rates may be higher than secured loans.

If this is the case, and you decide that an unsecured consolidation loan is still the only option for you, then there are two things that you need to do. The first is to make sure you get the loan that works best for you - which could be paying more money over a shorter period, or less money over a slightly longer period - and second is to work out which of thehow to get a guaranteed loan with bad credit to be repaid are at a higher interest rate that the unsecured consolidation loan that you've just taken out.

That may sound obvious, but you'd be surprised how many people pay off smaller loans just to get rid of them, even though the interest being repaid is quite low; you'd also be surprised how many people use the new loan for something other than repaying outstanding loans.

Once you've worked out which of your old borrowings are costing you more in interest, get them paid off quickly. You may have to pay an additional fee for making an early repayment, but these are usually on the borrowings that were going to cost you a lot more over the life of the loan anyway. If you have any of the loan left over then look at what else still has to be repaid and take the next thing with the highest interest payments.

There we have it; the pros and cons of the unsecured consolidation loan.

These types of loans may be far easier to get than you think, but there's usually a reason, in this case it's a slightly higher interest to repay and a shorter time to repay the loan. You should get the repayments to start after your pay goes in and all of your other major payments go out. If the money doesn't cover all of your borrowings then repay everything that's of a higher interest rate than the unsecured consolidation loan you've taken out.

Finally, never ever spend the money on anything that's not paying back money on current borrowings or your just taking on additional debt with your unsecured consolidation loan.

For information on other topics visit Alan D Paterson: The Blog.