Secured Loan, Your Answer to Unwanted Debt

Choose what’s best for you

Do plenty of research before choosing a lender.

Do plenty of research before choosing a lender.

If you have chosen a secured loan for debt consolidation, there is a process you must follow. Whether you have chosen to apply for a secured or unsecured consolidation loan the processes is similar. The following steps will help you decide on what choice is best for you.

Begin assembling your personal financial information. Deciding whether debt consolidation makes sense for your individual situation requires you to take a close look at all your consumer debt. Gather your most recent copies of your loan payments, credit card bills and any other statements you want to include in your secured loan.


Once gathered your information can be copied into a single document that shows the total remaining balance and interest rate for each debt you owe. Make sure to include all debts, all balances and all interest rates.

While most consumers choose to consolidate all their consumer debts, now is the time where you can examine your list of debts and choose which debts you plan to include for your consolidation loan. If you choose to only include a few of your debts, make sure you include the ones with the highest interest rates.

Do the math

You now need to total the amounts of all debts you plan to include to establish the total amount of the loan you require. Make sure you include all debts to be satisfied by your secured loan.

It is now necessary for you to find an average interest rate by adding the rates of the debts you intend to consolidate and dividing them by the number of debts. For example, if you have three credit cards with interest rates of 16 percent, 17 percent and 18 percent equals 51 percent. Divide that figure by 3 and your average rate is 17 percent. The interest rate for your new secured loan should be much lower than 17 percent.

Secured or unsecured

Choosing the type of consolidation loan you will pursue will depend largely on whether you have assets that can serve as collateral. If so, it is generally best to get a secured consolidation loan. Conversely, you should likely get an unsecured loan if you have no assets to serve as collateral.

Armed with your financial information and a reference point of where you are, you can begin the process of consulting secured loan lenders. This process will allow you to quickly weed out any loan offers with an interest rate above what you determined to be your average interest rate. You should be able to find a lender that will have a lower rate available for you. It is just a process of seeking them out. Diligence and being proactive are the keys to successful search results.

Apply for your loan

The loan application process requires you to complete various forms containing your personal information. Since you have already compiled this information, this process should go quickly. Some secured loan lenders charge a loan application fee, but the cost should be minimal.

It is likely that you will get an answer on your loan application rather quickly, and you’ll either be approved or rejected. Getting a secured loan approved sets a course for getting out of debt. Don’t be dismayed if you get rejected. Not all lenders approve all borrowers. You can then pursue another loan with another lender, or you may want to consult a credit counseling service to determine why you were rejected.

Other recent posts by bryanh