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An unsecured debt consolidation loan is where a loan is given without any collateral. Credit cards, payday loans, personal loans are some examples. Unsecured debt is the most common form of debt and presents the biggest problem for consumers.
Unsecured debt consolidation loans often have very high interest rates, generally ranging from 15% to 23%. This means you will end up paying much more back on the debt consolidation loan than was originally borrowed by you.
While your credit score may still look OK from an unsecured debt consolidation loan, your credit worthiness is extremely low. You may be denied credit because of your inability to make a new payment on a new loan.
We have compiled a list of different types of unsecured debt consolidation loans, in order to give you more information.
Doug fell into the low-interest-rate net that a lot of credit card companies cast. “I was so happy to get the card, I missed the fine print that my interest rate would go from 3.5 percent for 6 months all the way up to 27 percent after that! I had four cards with the same excellent initial rate, and transferred balances from my other cards to all of them. I was fine for the initial months, but once the interest rate jumped, I had no way to pay them off. I wished I had considered a different debt relief solution instead of doing balance transfers.”