Loan Consolidation can help clear your debts and allow you to start again our Lifestyle Magazine found. With the cost of living increasing and more and more people finding them in debt, our Debt Management expert decided to look at Debt Consolidation and find out if consolidation loans are a good way to ease your debt. According to a recent report into Debt Management, it was found that people are trying to hide their debts and make themselves believe that their debt is not a problem. The report found that a large number of people are not taking their debt seriously until it is to late and they lose their home or become bankrupt. Studies found that the average debt is £10,000 and people were unaware of Debt Consolidation and what consolidating your debts can do for you.
So what is Debt Consolidation which also known as Loan Consolidation? A normal Debt Consolidation or Loan Consolidation is where you can have all your debts such as credit cards, loans, store cards put under one roof so to speak. Instead of paying off all your creditors at different rates and worrying about a knock on the door because you cannot afford to pay off certain debts, Debt Consolidation Loans which can either be secured on your house or can be unsecured in the form of a personal loan will pay off your debts. The Debt Consolidation Loan will allow you to sleep at night knowing that each month you only have to pay one single payment instead of worrying about all your different debts.
‘Debt Consolidation Loan Will Allow You To Sleep At Night’
A Debt Consolidation are not right for everyone but should be considered if you have a large number of debts that are keeping you awake at night. Obviously if you have debts below £5,000 then there are other options that you can look at which includes contacting your debtors and arrange weekly or monthly payments.
We suggest that you should consider a Debt Consolidation Loan if you are finding yourself in the following situations:
- You are finding it difficult to keep up to date with existing debt repayments.
- You are experiencing problems meeting your day-to-day expenses.
- Your existing debts have high interest rates and you would like to lock your debts into one, lower rate.
- You want to reduce your regular payments to a new lower amount.
Before you take out a Debt Consolidation make sure you do an in goings and outgoings to make sure you can afford the loan and keep up with the repayments.
So what are the good things about Debt Consolidation?
- Debt consolidation can reduce your monthly rates to a new lower amount.
- High interest rates are replaced with a lower rate.
- Debt consolidation is useful for combining multiple debts into one.
- It stops your creditors pestering you because you have paid them off.
There are also some negative things about a Debt Consolidation Loan which include:
Debt consolidation in the form of secured loans can last over 20 years and although the monthly repayments may be attractive, check out the total amount repayable!
If you are considering a secured loan as an option to pay off your debts, you should bear in mind that if you are unable to meet your financial obligations then you might be forced into selling your house (repossession).
Normally, you will be extending the length of time you will be in debt. Therefore, you should have a Debt Management Strategy to avoid increasing your debt further.
Once you sign up to a secured loan, the length of the agreement cannot be altered without financial penalty.
Secured loan rates will normally vary relative to the Bank of England base rate. So the low rate you were offered initially may increase next month or next year.
If you are considering a Debt Consolidation Loan then make sure you do your research and check out the interest rates with different companies. It is also advisable that you also get expert advice and once you have decided to go down the road of clearing your debts with a Debt Consolidation Loan, you should make sure that the company is registered with the FSA.
Once you have decided to clear your debts using the loan system it can take around two weeks or a little bit longer to put into place. If you are using the loan as a second charge against your property then you will need a valuation of your property to determine the value of your home.
Do not worry about your credit rating if you want to use a Debt Consolidation Loan to clear your debts, your credit rating will not be affected.
After our research into Debt Consolidation Loans we have found on the whole this is a good system to clear your debts and allow you to sleep at night. You need to remember that you need to keep on top of your loan repayment as if you do miss a payment then this will damage your credit rating and can land you in debt once again.