What is the Benefit of a Debt Consolidation Secured Loan?

Melinda (Milli) Haine Melinda (Milli) Haine | Loan Underwriter

All of us want to find ourselves in the most favourable financial position possible. Yet that sort of thing does not happen by itself. It requires diligence to properly manage finances, including managing debt. One of the best tools we know of for that purpose is the debt consolidation secured loan. This kind of loan lets you use the equity in your home to finance other things.

Though there are some risks involved with using a secured loan to consolidate debt, the benefits outweigh the risks for most people. You should do fairly well with a secured loan as long as your budget shows you can afford monthly payments. However, make sure that is the case. You could lose your home if you default on a secured loan.

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Five benefits of Secured Loans

Secured Loan Expert encourages the use of secured loans for debt consolidation. We believe a secured loan offers many benefits over the other options. Secured loans are more affordable and easier to get than other forms of consumer financing, and they can certainly cost less in the long-term compared to high-interest unsecured debt.

To prove our point, here are the five primary benefits of secured consolidation loans:

  1. Single Payments – Most people who consolidate by using a secured loan spend the money to pay off two, three, or more existing debts. By combining all of those debts into a single loan, you are left with one monthly payment that is much easier to work into your regular budget.
  1. Lower Interest – Unless a consumer's credit is extremely poor, secured loans typically offer better interest rates. When combined with shorter terms, this actually ends up saving money over the life of the loan. Less interest paid means a lower total cost of borrowing.
  1. Easy Terms – If your budget is already stressed, accepting a longer repayment term will reduce the size of monthly payments. This makes repaying your loan a lot easier if you are already overwhelmed by high-interest debt. One word of advice, though – it is best to find a secured loan that does not include early repayment penalties. This allows you to pay more per month should your financial circumstances improve.
  1. Improved Credit – A heavy load of unsecured debt could be negatively affecting your credit rating. If so, a secured loan is one way to begin repairing that poor credit. As long as you make your monthly payments as agreed, your credit rating will slowly improve over the life of your loan.
  1. Equity – A secured loan is taken out based on the equity in your home. You are essentially using your equity as a financing tool to provide the funding you need. It is a great way to take advantage of the value you have already built into your home by making your monthly mortgage payments and maintaining the property.

Be Cautious and Compare

The potential of the secured loan makes this form of consumer financing very powerful. However, please be cautious. Use the Secured Loan Expert website to compare lenders and loan products side-by-side. Only by comparing loan products will you know which lenders are offering the best deals. Follow-up those comparisons by getting our experts to provide the full loan details from each lender you are considering applying with and to use their knowledge of each lender to your advantage.

We also strongly urge consumers to prepare a monthly budget if one is not already in place. A budget details your income and outlays, on a monthly basis. This is the only way to know for sure that you can afford to take on another loan. If you cannot afford it, obtaining a secured loan could get you into more trouble than you are in right now.

We recommend a debt consolidation secured loan to any homeowner currently struggling with a large amount of high-interest debt. Secured loans can help you get your finances under control while making your monthly budget more manageable.

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