It’s no secret that the UK has a mounting debt problem, with the average household now owing an estimated £8,958 (not including mortgage payments).
If you factor in those that also have some form of unsecured loan then this number jumps to a startling £20,865! – And remember, we’re still not including mortgage repayments!
For those that suffer from large amounts of debt, it is often owed too multiple creditors, furthering the financial an emotional hardship it can cause.
You may find that the sheer amount you owe very unmanageable, causing you fall behind on payments or miss them entirely. Such actions generally result in late payment charges being made, further adding to the amount owed.
Generally the best option for people in such situations is to act as quickly as possibly, before any more debt is incurred.
With an estimated £259m in interest paid daily in the UK, consolidating all your lines of credit into one manageable repayment could help save you hundreds if not thousands!
The basic idea behind a debt consolidation loan is that you take out one low rate loan, that will cover the amount you have outstanding on your current debts. This can make a dramatic difference in monthly repayments if you owe considerable amounts on costly store and credit cards.
If you are a homeowner, then you will have the option to secure your consolidation loan against the value of your home. Although this will give you access to lower interest rates, its important to be sure you will be able to meet the required repayments.
If you do not have any form of collateral then you are likely to have to pay a little more than those with collateral would, either way it will work out cheaper than paying off multiple lines of credit.
This method of consolidation has become very popular over the years, for the good reason that it does help people in large amounts of debt. It’s important to note though, that if you have say, one unsecured loan that is at a rate lower than that of the consolidation loan, then it would not be wise to include it.
As mentioned,
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