The Easy Way to Consolidate Debt Without Collateral

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What Is the Easy Way to Consolidate Debt?

When you consolidate debt, you combine several loans into one loan. A typical consolidation loan requires collateral. The easy way to consolidate debt without collateral is to use an unsecured personal loan that offers you lower interest rates with no collateral requirement.

Why Consolidate Debt?

People get into debt in a variety of ways. They may be paying off student loans, medical expenses, or credit card balances. They may need to finance a major purchase that can’t be paid for with their normal cash flow.

If you have multiple debts to manage, you’re faced with writing numerous checks every month. You need to work with each lender separately to make any changes to your payments. It’s more difficult to get the most beneficial loan when there are many lenders to work with.

There are good reasons to consolidate debt. You’ll simplify your bookkeeping by working with just one lender.You can usually reduce the overall interest rate you’re paying, which cuts down the amount of your monthly payment. Additionally, taking control of your debt will help you to protect your credit rating and could get your out of debt faster.

Do You Need Collateral to Consolidate Debt?

When people think of consolidating debt, the first thing that comes to mind is that they need collateral to guarantee the loan. For example, if you borrow money against your car, you’re using your car as collateral. It reduces the risk for the people lending to you because they can repossess your car to pay your debt if you can’t make the loan payments.

While collateral makes lenders happy, many borrowers would prefer not to put the things they own at risk. For example, if you use your home as collateral and something unexpected happens that prevents you from paying off the loan, you could lose your house. If you’re in a bad situation where you can’t make loan payments, the last thing you need is to end up homeless.

Unsecured Personal Loans Eliminate the Need for Collateral

In recent years, unsecured personal loans, also known as peer-to-peer loans, have become more popular and advantageous to all involved. With peer-to-peer lending, an individual can get a loan from other people, not financial institutions. Here’s how it works.

The person who wants to borrow funds submits a loan application. People who are looking to invest fund that loan—usually there are multiple investors involved to reduce each lender’s risk. The investor can build a diversified portfolio based on a comfortable level of risk, and the return is usually higher than an investor can get elsewhere. It’s a win-win proposition.

BTCjam: The Easiest and Best Way to Consolidate Debt

BTCjam offers a unique way to consolidate debt into an unsecured personal loan. What makes it unique is that the financing is done using BitCoins rather than dollars. Using BitCoins reduces the costs involved in managing the loan and loan payments. With fewer costs, loans can post a higher return to attract more investors.

BTCjam uses a proprietary Global Credit Score algorithm to accurately assess each loan’s risk. Investors can choose the level of risk they want to tolerate. Investors are also encouraged to fund different types of loans, which further reduces their risk.

Since investing at BTCjam is so attractive, borrowers get the advantage of a large pool of investors to fund their loans. Borrowers can define the rate they will pay and how the loan will be repaid. The interest rates are lower than those a borrower would find at their bank.

If you are planning to consolidate debts, BTCjam is the place where you can get the best loan available. Visit our website at BTCjam.com for more information and to get your unsecured loan started today.

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BTCjam Can Help You Consolidate Debt

Note: This is the English translated version of a blog post originally directed to  our growing  Brazilian community. If you speak Portuguese, check out our original post.

I’m in debt, what can I do?

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My last article described how BTCjam generally works and provided some tips to help you get a loan with us. Now let’s get into more detail about how BTCjam can be a useful tool to help you consolidate your debts at lower interest rates.

This subject is increasingly relevant given that Brazil has some of the highest interest rates in the world. In fact, Brazil currently holds the record for the highest interest on credit cards in the world.

Current interest rates in Brazil

Based on a study conducted by Proteste that included 108 credit cards from 12 financial institutions, a regular Brazilian paid in July 2015 on average an interest rate of 378.76% for their credit card debt. The runner-up in this disastrous ranking is Colombia with 62.51%. In other words, Brazilian credit cards charge more than five times the interest charged in Colombia, and more than nine times the amount charged by the country in third place–Peru.

In Brazil, credit cards charge 14% per month while in the United States it is only 14% per year! With the average American income being five times higher than that of Brazil’s, the disparity in interest rates is shocking.

It’s not just credit card interest that is high in Brazil; overdraft interest is also exorbitant. According to Procon São Paulo, the average interest rate charged by banks on overdraft is reaching 11.49% per month – the highest in 10 years. Even the other kinds of loans, that are usually cheaper exceed the average of 6% per month.

Why are interest rates in Brazil so high?

Several economists have analyzed this question and the answer is not conclusive. There are many elements that make up the interest that is charged to the consumer, but we can summarize them as four main factors: the bank’s profit margin, tax, competition and default.

For those who are curious, I will explain the following:

  • Profit margin: Banks, like any business, have shareholders who invest in the company in exchange for a return. Banks seek profit to remunerate such shareholders with dividends.
  • Taxes: Governments not only tax the citizens, but also companies. The more banks are taxed, the more interest they charge. The Brazilian government is known to be a bloated machine that finances its expenses by charging high taxes.
  • Competition: The five largest Brazilian banks control 80% of the credit. Cases like this where there is low competition do not incentivize price drops (e.g. interest rate drops). Banks are protected by legislation and financial demands that drive away startups seeking innovative solutions to improve services for consumers.
  • Default: As a rule, the more defaults, the greater the interest. There is no national credit system in Brazil like in the US, so generally Brazilians pay higher interest rates to cover the defaulters’ failure to pay. This creates a vicious cycle since increasing interest rates generates more defaults, and more defaults create higher interest rates… BTCjam has developed its own credit system so that people pay fair interest rates that are in accordance with their ability to pay. Learn more about how BTCjam works.

The concept of debt consolidation

Raise your hand if you never entered the overdraft! I have definitely overdrafted my bank account in the past. I remember looking at my statement day after day, and to see the growing debt was distressing to say the least (just a note: Brazilian banks charges interest on a daily basis). I clearly remember a trip to Miami where I got carried away with the low prices. I ended up spending more than I could afford and when the bill came around, I could not pay it off so I paid the minimum balance. The following month I had to pay 14% on the debt I procured!

Sometimes an initial debt generates a snowball of  people getting another loan to pay the initial one. The result: people end up putting too much of their income towards the repayment installments that follow. To help people get out of this vicious cycle, one of the solutions is to exchange the most expensive debts (those that charge high interest rates) for a cheaper debt (with lower interest rates). This operation is called Debt Consolidation.

Debt consolidation is the solution to paying less interest

Instead of paying 14% per month on a credit card or 10% on overdraft, it can be preferable to borrow at BTCjam where borrowers pay an average of 6% per month!

For example, by consolidating a debt of $5,000 with 14% interest per month in 12 installments to a debt at 6% interest per month could save you $280 per month, or $3,400 in total. Recalling that the original debt was only $5000 (i.e. consolidating your debt) allows you to save 64% on the original debt!

Conclusion (TL;DR)

I hope you benefited from this introduction to the concept of Debt Consolidation for those who did not know, and from the explanation of how BTCjam helps people repay their debt with lower interest rates than banks or credit card companies.

Do not waste time; get a loan now on BTCjam and see how we can be of great help in paying your debt by saving on interest. If you know someone with debt, recommend BTCjam.

After all, a true friend does not let a friend struggle.