If you're feeling overwhelmed by your debt, looking into debt help can be confusing. How do you decide which product is best for your needs? Understanding the difference between secured and unsecured debt consolidation loans is one of the first steps in deciding how to manage your debt.

Unsecured Consolidation Loans

Instead of owing small amounts to several creditors, taking out one larger loan with one monthly payment not only helps to streamline your finances but can save you large amounts in interest. An unsecured loan is much like a credit card or personal loan. The only collateral is your signature and credit score. You can shop for an unsecured loan through local banks, or you can simply call financial institutions with which you already have a relationship.

Secured Consolidation Loans

A secured loan is levied against something you own, such as land, a home, or securities. If you fail to make your payments, the asset can then be seized and liquidated to recover the borrowed funds. A lot of people like taking out secured loans simply because the interest rates are normally lower and the payment terms are generally more attractive.

Which One is Right for You?

Which product would best meet your needs is determined by a host of factors. You credit score, income, and personal risk tolerance will guide you in choosing the right kind of loan. For example, some people don't feel comfortable borrowing against their home in any but the most dire of circumstances. Others may see it as a savvy move that they are confident they can repay.

Secured and unsecured loans are offered to allow you to put all of your outstanding debt into one manageable monthly payment. Being aware of the differences between the two will help you to make the right decision. Be sure to shop around for the most attractive deal, and be sure you understand the nuances of your loan before you sign on the dotted line.