Debt management programs offer to debt-laden consumers a plan and a program to help them to deal with their debt. However, some consumers are not very familiar with these programs and have questions about how they work and about all the different features of a debt management program.
One of the questions that they might ask is this one, “Can auto loans be part of a debt consolidation loan?” That is a good question to ask, since in some cases a car loan can make up a major percentage of the debt that a person has incurred. The answer is yes.
If a person gets a loan to consolidate their bills into one bill then that loan in most instances can go for whatever debt that the individual wants to apply it to. One example would be a home equity loan taken out to consolidate debt. If a person borrows money against the equity in their home to consolidate their debts into one payment at a lower interest rate, the lender in most cases don’t care what the borrowed money is applied to so long as the borrower makes the payments on the note.
The same in true with most unsecured loans, as long as a borrower is making payments on the loan the lender does not care where the money is being spent. The question that a person has to ask himself or herself is this one, do I want to pay off my car loan with an unsecured loan that may be charging more interest than my original car loan?
Unsecured loans tends to have higher interest rates than secured loans.