Digital News Report – Debt consolidation loans are used to combine multiple unsecured obligations into one low interest payment. The goal is to lower the interest rate and hasten the term of the obligations.
Various banks offer debt consolidation loans to customers with bad or poor credit. The interest rate will depend on type of loan, credit history, loan amount and lender.
Many banks will allow customers to use various items for collateral. In some instances cars, boats and other valuables can be used as security.
“Use your home’s equity to replace credit card, auto loan and other high-interest debt”, Chase said in a statement. Secured debt consolidation loans will typically carry lower interest rates.
“Interest payments on home equity loans or lines are potentially tax deductible, but credit card and auto loan interest payments are not,” Chase reports. “Make a single payment to your debt consolidation home equity loan or line rather than multiple payments to many lenders.”
There are some benefits to using your home as security. The bank says that customers can take advantage of lower interest rate, tax savings and time savings.
Home equity lines of credit and home loans can come with a lower interest rate. “Rates on home equity loans and lines can be lower than credit card rates by 7-10%-or more!”
Whether you get a secure loan or unsecured loan, you should always check with a tax professional and advisor before making a decision.
By: Tina Brown