Debt Consolidation

A Debt Consolidation Loan gathers several different debts into a single affordable monthly payment. This can be a method of paying off credit cards, store cards and personal loans.

This loan will allow you to pay off several debts and pay one single monthly repayment so you don’t have to manage various debts at the one time. You need to make sure that the consolidation loan is enough to repay. There are two types of debt consolidation loan to consider:

  • Secured: The amount you borrow is secured against an asset such as your home and this type of loan is often referred to as a homeowner loan.
  • Unsecured: This debt isn’t secured against any other assets. You could consolidate up to £25,000 using an unsecured personal loan.

Advantages of a Debt Consolidation Loan

  • Everything you owe is consolidated into one place so you only have one payment and interest rate to keep track of.
  • You will only pay one monthly payment instead of multiple payments each month.
  • This is an informal solution and is not shown on the public insolvency register.
  • There’s a possibility you could have more time to pay off your debts.
  • This loan will have a more positive impact on your credit score than other solution if you make your payments each month.
  • All of your debts will be repaid at the end of the loan term as long as you haven’t missed any payments.

Disadvantages of a Debt Consolidation Loan

  • Your home may be at risk if you secure your loan against it.
  • All debts must be paid in full.
  • If you have a poor credit score you may not be eligible for this type of loan.
  • Interest rates on your debts are not frozen.
  • There’s a possibility you will pay back on your debts as it is repaid over a longer period.
  • It may take longer to repay back all your debts.

Get in touch with us about a Debt Consolidation Loan today