A 401K loan uses your retirement fund as collateral.
There are many options for debt consolidation using secured loans.
You can refinance your house, take out a second mortgage, or get a home equity line of credit.
This might result in a payment that is not low enough to make a difference in your financial situation.
Using balance transfer options on no-interest or low-interest credit card offers are tricky.
If you fall behind, the mortgage holder can foreclose on your house to satisfy the loan.
Unsecured loans are based only on your promise to pay and are not secured by any property that can be foreclosed or repossessed to pay the loan. Unsecured loans usually have a higher interest rate because they carry more risk for the lender.
If you use the card for anything else, the other charges might generate interest while payments are applied first to the no-interest balance.
Also, the no-interest or low-interest period is generally limited.
And, while the interest rate might be higher than a secured loan, it might be less than is charged on several different credit card balances, thereby lowering your interest burden and your payment.
An unsecured debt consolidation loan might be hard to get if you don’t have sterling credit.
When you take out a secured loan, such as a mortgage or a car loan, you pledge certain property, such as your home or your car, to secure the repayment of the loan.