Those with secured personal loans and credit balances find it easy to consolidate their loans. However, it is not easy to consolidate unsecured loans. Before understanding how you can consolidate unsecured loans, it is important to understand the difference between both of these items. Through a little effort it is even possible for those with bad credit to get secured personal loans.

Secured and Unsecured Personal Loans

The secured type is obtained against a home or property as collateral. Other purchases like buying a car, a caravan or yacht can also be through this product. The lender has the assurance that in the event of missing payments or that if the customer is unable to pay off the loan; the asset can be seized by the lender. The lender will then sell the collateral or security item to compensate for the loss. In the unfortunate event that the sale does not end up being profitable to the lender, you will end up paying for the loss incurred. This is in addition to the loss of property or the asset. Unsecured loans are offered without any collateral or security. Interest rates are generally high for such loans, and in the instance of missed payments to the lender, the customer will not lose anything other than ending up with bad credit ratings. Consolidating both types of loans requires the use of a debt consolidation calculator and an appraiser.

Easy Consolidation for Secured Debts

As said earlier, banks and other financial institutions do not easily process applications for unsecured personal loans. Having said this, it is not easy to consolidate unsecured personal loans either. While you are going for a consolidation of secured personal loans, banks have the assurance that the same can be recouped at any time by selling off the asset or property kept as a security against the loan. The same applies to consolidation of bad credit secured personal loans as well, as consolidation is done against all the assets that can be secured against the consolidation. In addition, consolidating such loans is generally done at much lower interest rates. Home equity loans are one such example of a consolidated secured loan.

Unsecured Debt Consolidation

Credit card loans are unsecured, and are mostly priced at high interest rates. One of the best ways to consolidate such loans is to go for a home equity loan. Suppose you have a home worth $500,000 and you already have a mortgage against this property for $400,000. You can get $100,000 worth of equity for the property. If you have already paid of some portions of the mortgage, say $50,000, the amount can be added to the equity as well. See if the home equity loan will meet your need of paying off all the unsecured loans. Some financial institutions and money lenders encourage their customers with bad credits to go for a new personal loan to pay off their unsecured debts. Consult with a financial manager and use the debt consolidation calculator provided by the lender to figure out what works best for you.