Availing Personal Loans for Debt Consolidation

Online, March 16, 2011 (Newswire.com) - People take a personal loan with the intention of spending money extravagantly on a vacation, although a very small percentage of population actually procure a personal loan for financing a vacation.

Personal loans for debt consolidation are also availed by people who are highly indebted in the case of credit card payment and looking for ways to repay the same.

There are 2 types of personal loans:

1.Secured Personal Loans: A secured loan is a loan in which security is pledged for the repayment of a loan by an asset. The asset may be a car, a home or any property that can be used as a collateral for procuring the loan.

2.Unsecured Personal Loans: Unsecured loans, or signature loans, are advanced to the borrower on the basis of borrower's credit history and income. This type of loan does not require any collateral.

Personal Loans for Debt Consolidation:
A consolidated loan is a large sum of money which is borrowed to pay off all other outstanding debts. To understand whether debt consolidation is an option worth considering, it would be useful for people to compile three lists. The first should be one's household's total income, the other two lists should contain details of essential expenses.

Debt consolidation is the process of discharging debt obligations, both secured and unsecured, using a loan that has lower monthly payments and a longer repayment periods as compared to the already existing debts. Consolidation can be undertaken by availing either a secured personal loan or an unsecured personal loan.

It's always better to discharge unsecured debts and secured debts by availing unsecured personal loans and secured personal loans respectively.

In order to be eligible to qualify for personal loans, one has to meet the following criteria:

*The bank wants to see a copy of a budget to make sure one is going to be able to keep up with that payment.

*One needs to have a source of income. He has to make sure that he pays tax returns.