Disadvantages of an Unsecured Debt Consolidation Loan

If you are considering getting an unsecured debt consolidation loan, there are many things that you will need to consider. Here are a few of the disadvantages of getting an unsecured debt consolidation loan.

Longer Repayment Period

Typically, unsecured debt consolidation loans have longer repayment periods than secured debt consolidation loans. This can put a strain on your budget.

More Overall Interest

Getting an unsecured debt consolidation loan means that you will most likely have to pay a higher interest rate. This means, of course, that you will be charged much more in interest over the life of the loan--possibly thousands of dollars more.

No Tax Benefit

By using an unsecured debt consolidation loan, you will not be able to take advantage of any tax benefits. By comparison, if you use a home-equity loan or home-equity line of credit, you would be able to deduct the amount of interest that you pay on the loan from your taxable income at the end of the year.

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