Secured personal loans tend to be easier to get because you use your personal property to guarantee the loan.

In most cases, lenders will allow you to take out as much of a loan as you can back with collateral. This allows you to consolidate significant amounts of your debt with one loan.

Disadvantages

If default on the loan, the lender is legally allowed to take your collateral to repay the balance due. This can really become a problem if you experience problems paying on the loan late in the term and have already paid back a large portion of the amount due. Losing your personal property to pay back a loan that was almost paid off already can be frustrating.

Interest rates on secured personal loans tend to be higher than unsecured loans and not as negotiable either.

Unsecured Personal Loans

Advantages

You do not need to put up full collateral to get approved for the loan. You can try to get the loan based on your credit, or you can offer partial collateral to entice the lender to approve the loan.

The interest rates on an unsecured loan are lower than a secured loan because the loan is based on your credit rating and your history of making good on debts as opposed to relying solely on collateral to secure the loan.

Disadvantages

It is difficult to get an unsecured personal loan to cover a significant amount of your credit card debt. If your credit is excellent, then you stand a good chance at getting the loan you need. But less-than-perfect credit could be a problem.

Home Equity Loans

Advantages

Home equity loans can have fixed interest rates that allow you to maintain a constant monthly payment.

Home equity loans tend to have very good interest rates that will save you a considerable amount of money on the interest debt you are carrying with your credit cards. You can also pay points on a home equity loan that can reduce your interest rate even more.

Disadvantages

If you default on a home equity loan, you will lose your home.

Home equity loans tend to have short terms that can create high monthly payments that may be more than the payments you were making on your credit accounts.

Credit Card Balance Transfer Accounts

Advantages

Credit card balance transfer accounts can be easy to get, especially if you are getting offers in your mailbox on a regular basis for credit card debt consolidation through a new credit account.

Most credit companies offer you a discounted rate on transferred balances that can help reduce your interest debt.

A credit card balance transfer account can have rewards and cash-back programs just like regular credit cards. That means that you can use the balance transfer account like a regular credit card and benefit from the rewards it offers.

Disadvantages

The low interest rates on transferred balances are normally introductory offers. The low interest rate normally expires after an initial introductory rate and is replaced by a higher rate. Read the credit card agreement to see what the transfer interest rate goes up to after the introductory period.

Most credit card companies do not apply transferred balances towards their rewards programs. While you can benefit from using your new credit card, you may not see any benefit from the thousands of dollars that you transfer over to consolidate your other cards.

It is still a credit card, and you should read the credit card agreement to find out information such as the maximum interest rate, annual fees and penalties for late payments.

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