Loan Types

There are two main types of loans you can get - secured and unsecured. If you are going to get a student loan package then you need to know what the major differences are.

Basically there is secured and unsecured loans:

• Unsecured loans are more expensive because you are giving nothing to the finance company to hold for collateral. They are taking it in good faith that you will pay the loan back. Whether you get accepted or not comes down to your work history, your employer history, your level of earnings and character references. It comes down to your background being stable and trustworthy.

• Secured Loans - This is when you have something real, tangible and valuable to sign over to the financier who becomes the owner of that thing until the loan is paid off. Whatever you sign over to them still remains in your possession but if you fail to make good on the loan then they take possession of the goods and sell them.

If the thing you put up for security is not worth enough to cover the cost of the loan then they will bill you for the balance.

The scenario described in the above statement, on secured loans, is a worse case one but it still happens. This happens often as a result of disability or accident. Obviously it is the very last thing you want to have happen to you

Now, when it comes to your student loan consolidation, you may want to consider asking people you know (usually relatives) if they would be prepared to act as guarantor for you and put up security. This is because secured loans can be obtained at a lower rate of interest than unsecured loans

Student loan consolidation packages usually have a low rate of interest but this can be made even lower if you can get a secured loan