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There are two types of debt consolidation loans. One is a secured debt consolidation loan where collateral is put up by you to obtain the loan. If you don't pay back the full loan amount the debt consolidation company has the right to take over whatever you place as collateral. The advantage of a secured debt consolidation loan is that there is a lower interest level and the amount of the loan can be quite large depending on the value of your collateral. The second type of debt consolidation loan is an unsecured debt consolidation loan. With an unsecured loan there is no collateral backing the loan to you which means higher interest rates and the debt consolidation company usually allocating a lower loan amount. Which loan is better for you? Well that depends a lot on your ability to repay the loan. If you can repay the loan in full then the secured is better because of the better interest rates. An unsecured loan would only be better if you feel there is a high chance you wont be able to pay off the loan.
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