How a Secured Loan Can Make Paying the Bills Easier
America is drowning in debt. The bills stack up on the desk and paying them becomes a long and complicated chore. A secured loan can give you peace of mind as well as the convenience of one payment.
Debt consolidation loans are very popular. They are essentially secured loans, typically secured by the equity in your home, that are used to pay off all of your other debts. Thereby effectively consolidating your bills into a single payment.
In addition to only having one payment every month securing your debt with the equity in your home can have 2 other major advantages.
1) Save Money!
The interest that you pay on an equity secured loan is typically less than on unsecured debts, Securing a debt with your home greatly lowers the risk that a bank takes by lending you money.
2) Pay Less in Taxes!
The interest on any debt secured by your home could potentially be tax deductible, meaning that you will owe less in taxes. For many people this is a major benefit.
Sounds easy and advantageous, right? Where do you sign up?
There are a few things to consider first.
Many people make the mistake of paying off their unsecured credit card debt with a secured loan and acting like their debts have disappeared. They pat themselves on the back for so quickly and efficiently getting out of debt.
The reality is that you never pay off your debt by moving it around. If you believe that you do not have the self-control to keep from getting back into unsecured debt then consolidating in this manner could get you into a lot of trouble.
The worst-case scenario would be that you consolidate all of your debts on a secured loan and then proceed to get into unsecured debt all over again, resulting in both the secured and unsecured debt.
Also, securing that debt with your home means that if you fail to make the payments you could potentially lose your home. Consider thoroughly the consequences of moving from an unsecured source of credit to a secured one.