Multiple debts mean multiple interest rates and payments. Separate payments on varying interest rates can be costly. Merging multiple loans into a single loan, or debt consolidation loan, make sense. A consolidation loan is used to pay off existing loans and consolidates the amount into one loan. Instead of paying a number of creditors, there is only a single monthly payment. Debt consolidation can be of two types, secured or unsecured.

Secured debt consolidation loans are backed by the borrowers real property or home. If the borrower does not pay the loan as agreed, the lender can recover their money buy selling the borrowers home or property. For people who do not own real property, or prefer not to use their home as collateral, there is another alternative. This loan does not require an asset to put up for collateral. This is called an unsecured debt consolidation loan.

When you have an unsecured debt consolidation loan, you don't have to have security for it. Security means that you can pay back the loan. Everything that can be done by consolidating a debt can be done just as well through an unsecured debt consolidation. There are even some more positive things to it, such as that the people with the consolidated debt do not pay the people they borrow from, and they don't have to keep track of who they owe what. The individual presents the loan provider with a rendering of all the money owed, and the loan provider takes it from there.

A gap takes place between the time of debt repayment and unsecured debt consolidation loan repayment, which gives a borrower time for getting their finances regulated and normalized. Also, debt repayment is much more manageable in smaller, more affordable installments. And since there is no collateral, processing time on the unsecured debt consolidation loans is greatly reduced, which means you get the cash you need much sooner and with less trouble.

Unsecured personal debt consolidation loans may be harder to get for those people who have poor or fair credit. Even those with good credit may have difficulty. The largest available loan will be around $5,000-$15,000. The exact amount depends on your specific credit and employment status. If an unsecured loan is not available a secured debt consolidation loan may be necessary.

The typical length for debt consolidation loans is about 20-30 years. Although this places financial freedom at quite an arm's length away, you can rest assured that your credit rating will not be affected and the monthly payments toward this type of loan will be more affordable than other types. Debt consolidation allows for a no-hassle debt loan which would not place you in jeopardy for loss of property, even if you were to miss a payment.