Advantages and disadvantages of consolidating student loans
While there is a risk of losing collateral in a secured loan, it is often the consolidation loan of choice.
This is because interest rates are generally lower with consolidation loans.
Secured debt consolidation loans, unlike unsecured debt consolidation loans, require collateral to secure the loan. Before choosing a secured consolidation loan, you should be aware of both.
You should also be aware of how they work and how to choose the right one for you.
Homes are the most commonly used type of collateral.
Should you default in your loan, the lender can foreclose on your home, leaving you in a difficult situation.
To obtain a secured consolidation loan, you must have collateral.
This enables you to make one monthly payment to one lender instead of numerous monthly payments to multiple lenders.This can make paying your debts off a little less confusing but it does come at a cost.