The global recession has hit most of us. People are striving hard to consolidate their debt in the present financial situation. They want to convert all their loans into one so that they can manage it easily. It is very common to go for unsecured debt consolidation. But you need to consider your financial condition. . It is not always a wise decision to choose this type of consolidation in case you are financially in a bit better position. There are other ways which can be more beneficial to consolidate your debt wisely. Generally there are two types of loans available. You can get secured loans against putting your property for collateral. In case you default repayment, you have the risk of your property getting repossessed. An unsecured
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It is harder to recover from those who default and have serious debt. Unsecured loans are such as loans received on credit cards. There is no need for collateral if you pay back regularly. The unsecured loans have many disadvantages. If you possess a credit card it is very likely your debt increases disproportionate to you repaying capacity. You may make huge purchases forgetting about the repayments and heavy interest being charged. You realize it only when your monthly repayments get highly inflated because of uncontrolled purchases and high rate of interest. In case you are financially in a better position credit card may be a solution for you to consolidate your debt Many people use the option of transferring their debt from one credit card to other one thus availing rebate on interest. This does not provide a permanent solution. This only takes care of the problem …show more content…
The story starts five years back when my area, here in Lake Worth, Florida, was hit by a major hurricane, and I had got major damages to my house. My insurance covered about 60% of the repairs that I needed, so after my deductible and the local shortage of good contractors help. The rise in repair prices, left my savings at nothing and I did most of the work myself! Things were good for the next 2 years since housing in my area sky-rocketed in value and my house increased over $100,000. I thought it would be a good time to add even more value, so I refinanced and combined my first and second mortgage with a new sub-prime loan and got an extra 50k out of my houses value for some things like a pool and new deck in the back and new floors through out my house. The house value increased and my payments were below the normal of what it should be paying since my sub prime loan allowed this. My loan is called pick a payment and I can choose to pay the payment with 4,5,6 or 7% interest on to the payment. I choose the 4% since on a teachers salary I can only afford that one now and I thought that as the payment goes up, so would my pay. I am doing okay for now and my payment is about the same as it was before I refinanced. The interest rates go up once a year over the next five years until the fifth year my payment will be three times what it was at the start
It is harder to recover from those who default and have serious debt. Unsecured loans are such as loans received on credit cards. There is no need for collateral if you pay back regularly. The unsecured loans have many disadvantages. If you possess a credit card it is very likely your debt increases disproportionate to you repaying capacity. You may make huge purchases forgetting about the repayments and heavy interest being charged. You realize it only when your monthly repayments get highly inflated because of uncontrolled purchases and high rate of interest. In case you are financially in a better position credit card may be a solution for you to consolidate your debt Many people use the option of transferring their debt from one credit card to other one thus availing rebate on interest. This does not provide a permanent solution. This only takes care of the problem …show more content…
The story starts five years back when my area, here in Lake Worth, Florida, was hit by a major hurricane, and I had got major damages to my house. My insurance covered about 60% of the repairs that I needed, so after my deductible and the local shortage of good contractors help. The rise in repair prices, left my savings at nothing and I did most of the work myself! Things were good for the next 2 years since housing in my area sky-rocketed in value and my house increased over $100,000. I thought it would be a good time to add even more value, so I refinanced and combined my first and second mortgage with a new sub-prime loan and got an extra 50k out of my houses value for some things like a pool and new deck in the back and new floors through out my house. The house value increased and my payments were below the normal of what it should be paying since my sub prime loan allowed this. My loan is called pick a payment and I can choose to pay the payment with 4,5,6 or 7% interest on to the payment. I choose the 4% since on a teachers salary I can only afford that one now and I thought that as the payment goes up, so would my pay. I am doing okay for now and my payment is about the same as it was before I refinanced. The interest rates go up once a year over the next five years until the fifth year my payment will be three times what it was at the start