Unsecured Personal Loans for Debt Consolidation
Most applicants are expecting to receive an unsecured personal loan when lodging an application for debt consolidation. This is however rarely the case. Certainly it s possible to qualify for an unsecured personal loan that will absorb a number of other higher interest unsecured debts – however these are essentially bank style products which require the borrower to:
- have full financials;
- have sufficient income to qualify for the loan;
- have a clean credit history.
We regularly receive debt consolidation from borrowers looking for $20,000 plus for debt consolidation. They may be self employed with lack of financials or have some paid/unpaid defaults on their credit report.
These borrowers will not qualify for a traditional unsecured personal loan for debt consolidation. At the same time there appears to be no lender available in the market to day that will offer such borrowers an unsecured loan solution
Secured Personal Loans for Debt Consolidation
A Secured personal loan is a loan secured against your asset like a car, a truck, a boat etc. Borrowers who are looking for a low doc personal loan or a bad credit personal loan for debt consolidation may qualify for a secured loan if they can offer security required. The asset being offered to secure the loan musty be unencumbered – ie. have no other loans against it.
It s not possible to borrow the full value of your asset – but loans in the vicinity of 50% should be easy enough to source.
Even with secured personal loans, the borrower still needs to demonstrate their ability to afford the loan they are applying for.
Interest Free Debt Consolidation – is not a personal loan
If you are unable to qualify for a personal loan for debt consolidation but without it are having serious problems paying your existing debts – other alternatives do exist.
You may have see advertisements on the internet and in the wider media for an interest free debt consolidation. These refer to Debt Agreements. A Debt Agreement is a debt consolidation strategy available under the Bankruptcy Act of Australia to people who are insolvent and are unable to afford their debt repayments.
A debt agreement is a negotiated agreement between you and creditors controlled by government legislation. A debt agreement is a low-cost alternative to bankruptcy for those individuals who are on a lower income with few or no assets. Debt agreements are available to debtors with under $106,561.00 of personal debt and net income below $79,920.75,
To reach an agreement with your creditors, majority of creditors must accept your proposal and agree to the repayment terms that you are proposing. If this occurs, you will be obliged to maintain set repayments (lower than your current repayments) for several years until you come out of the debt agreement.
During the period of debt agreement your creditors are not allowed to hassle you providing you make the agreed periodic repayments. Also your interest costs are frozen and you make repayments on an interest free basis. Most debt agreements last for 5 years. At the end of the agreement you are debt free and get to start your life over.
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