If you have some unpaid defaults, perhaps old debt that you had no money to previously pay, you may be looking around for a consolidation loan to absorb all these defaults in order to have them paid.
Unfortunately finding a lender that would be prepared to offer an unsecured consolidation loan in order to pay out old defaults can be pretty much impossible.
Unsecured debt consolidation loans require clean credit
Unfortunately it will be next to impossible to find a lender that is prepared to consolidate into an unsecured debt consolidation loan some of you unpaid defaults, especially if these are significant (several thousand dollars). Unsecured debt consolidation loans are simply personal loans and are not available to someone with unpaid defaults, even if the loan is to be used to repay the defaults.
Unfortunately you will be assessed as a bad credit borrower even years after your defaults are paid out, and this will affect your ability to qualify for credit, especially unsecured credit.
Secured debt consolidation loans
Borrowers who are able to offer their lender the security of a motor vehicle may have a chance of consolidating their unpaid defaults into a loan. There are quite a number of lenders catering to this segment of the market – offering borrowers with some credit issues loans secured by a car.
The vehicle needs to be reasonably current and have no finance against it. Naturally the loan possible will only be to a percentage of the car value – not the full value or in excess of its value.
You may choose to use the security of a motor bike, a truck or a boat. Furniture or home content insurance can not act as loan security.
Get someone else to take the loan
Sometimes the easiest thing to do is to either borrow the money from family or friends or get them to take the loan on your behalf. This can work well for married couples, where one person whose credit history is healthy, takes a personal loan on behalf of the other. Of course with personal loans the borrower needs to have sufficient income to service the loan. You can not rely on an income guarantor here.
Can these be added to a new mortgage
While yo may be able to consolidate your unpaid debts into an existing mortgage, the same can not be achieved with a new loan. The distinction here is available equity in property that the lender relies on to secure your loan.
New mortgages have no available equity as the buyer is looking to borrow most of the purchase price and offer a modest deposit. If debts were to be consolidated on top of the mortgage, the buyer deposit would need to be increase by the amount of these debts.