Loans and
debt consolidation -
online loan guide
Consolidate all your existing debt into one manageable
monthly repayment!.
Debt consolidation
You may be tempted by the adverts of debt consolidation
companies. These companies offer to replace all your
existing loans with a single (‘consolidated’)
loan, so that only one loan repayment is required each
month. Your monthly outlay should fall, normally because
the new loan is secured,
or because you contract to repay it over a longer period
than the loans being replaced.
Consolidate your outgoings with
an Essential
debt consolidation loan
Consolidating your debts could
be a good idea, although you don’t necessarily
need the help of a debt-consolidation company, which
will of course charge a fee for its services. There’s
nothing to stop you shopping around for a better-value
loan and using it to pay off more expensive debts. For
example, you might take out a personal loan from a bank
(with structured repayments over a fixed number of years)
as a way of paying off more expensive credit
and store-card loans.
Debt-consolidation companies often target only homeowners.
This is because the consolidated loan can then be secured
against the home, making it less risky for the lender
and cheaper for the borrower. But then you stand to
lose your home if you fail to keep up the repayments
on the consolidated loan, so you should think twice
before going down this route. Bear in mind that if you
are a homeowner, re-mortgaging
is often a cheaper way of borrowing.
Whatever you do, don’t consolidate all your debts
and then use the money saved each month as an excuse
to finance new debts. Your debt problems will just get
worse.
About UK Consolidation
Loans
Just look at the television
to see how many credit cards are on offer, or personal
loans, or credit purchase or store cards. There is mail
almost every day offering some form of credit. There
are also hidden types of credit such as monthly payment
of insurance premiums and other items which are really
due in a lump sum.
For various reasons people
can build up debt without fully realising how much they
have in total. When they sit down to work out how much
they owe, they can be very surprised. When they work
out how much interest they are being charged they can
be more than surprised, they can be concerned and annoyed.
You may have had periods in
your life where you have not taken as much trouble to
keep a check on your borrowing and you may now have
reached a period when you need to take control of your
financial affairs.
You may need to borrow again,
and this time you might as well take a look at all your
debt and bring it all together in one controlled single
consolidation loan with one payment only to make each
month.
The main aim of a consolidation
loan is to reduce the monthly out going payment and
the interest rate being charged on the debt.
To put all the loans together
so that they are easier to control and it is easier
to see exactly where you are at any one time.
It will be important for you
to understand exactly what your current level of debt
is. How much your monthly payments are and how much
of that monthly amount is repaying the consolidation
loan and how much is just interest. You also should
draw up a schedule of when each debt will be cleared
and list down the APR for each debt.
Now armed with this information
you can approach lenders to check if their terms are
going to save you money or not. Be totally mercenary
about this. You want to save money.
Now if you want to lower the
monthly payment amount, you may need to do this by looking
at a longer consolidation loan period. If you do that,
the total amount of interest you pay may well increase
when you add together all the payments over that longer
period.
Compare the APR from that charged
on your existing debt to that offered by a new lender.
If your existing debt is made up of credit cards and
store cards then it is very likely that you stand a
very good chance of reducing the APR. That would be
especially true of these are old credit cards or store
cards from a time when rates were much higher than they
are now.
You will need to check the
terms of your old debt agreements to see that they do
allow you to redeem the debt early and if they contain
any redemption penalties. Even with a redemption penalty
it may still be better to move the debt, but the benefit
will not be as great and you need to include those penalty
costs when deciding whether or not to move the debt
to a new lender.
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loans-uk.org.uk
