Many individuals who are unemployed may be in a position where long-term unemployment and subsequent financial troubles that arise as a result of extended periods of joblessness have led to a bad credit situation, with many of these consumers looking for a variety of ways that may help them handle debt at the present time when their income may be minimal. In some cases, consumers are only able to live off of a combination of either their savings, unemployment insurance benefits, or income from a spouse, but there are also instances where consumers are simply underemployed and making a great deal less than they had previously been earning.
In situations such as this, some consumers feel that debt consolidation is going to be their best bet when it comes to combating multiple debt obligations due to the fact that a consolidation loan means that only one payment must be made on certain unsecured or non-necessity debts each month. Yet, for these unemployed individuals who have seen their credit score decrease as a result of missed payments, delinquency, or even defaulting in some areas, a secured debt consolidation loan may be one of the only options that will be available, despite the fact that there could be different circumstances in the lives of each consumer that might open a few more opportunities outside of debt consolidation or secured loans.
However, when we look at consumers who are turning to secured debt consolidation loans it’s obvious that these types of debt consolidation opportunities may come at a higher cost due to the fact that the interest rate on this particular loan could be much higher as a result of the bad credit position a consumer happens to be in or the collateral that may be offered. Any unemployed individual who feels that consolidation is best for their situation may find that a secured debt consolidation loan, if it is their only option, may be more affordable in terms of the monthly payment they must make versus the total payments on multiple debts that are currently not consolidated, but collateral is one aspect of this particular type of consolidation opportunity that consumers must remember will be required.
While interest rates on consolidated loans may average from anywhere between 12% to 29% or higher at the present time, borrowers must remember that the costs related to interest will depend on their personal situation due to the fact that the severity of a bad credit borrower’s situation will decide what rate they receive and any terms that may come with this particular type of loan. Providing collateral for a secured debt consolidation loan may lower these costs, but consumers need to understand that only meeting minimum payments on this type of loan will honestly create higher overall costs in the long run.
Yet, when it comes to unemployed individuals or underemployed men and women and their debt, few may be worried about the overall costs but are simply looking for affordability on a month-to-month basis. Obviously, the choice to use a debt consolidation loan or seek out a bad credit secured debt consolidation loan is a personal decision an unemployed individual or any consumer has to make. However, it needs to be remembered that if a borrower’s financial situation improves they must make sure that they focus as much as they can towards paying off this debt obligation, due to the fact that the bad credit repair process can be accomplished more easily if a consumer has paid off the majority of what they owe.