Credit has become a way of life for many people in the UK. Secured loans, unsecured loans, credit cards and store cards are commonplace and the amount of credit that exists, may be at different rates of interest. Some of these loans may be subject to comparatively high interest rates. It is understandable then, why so many decide to consolidate this credit into one more manageable monthly repayment.
Only One Repayment, And Cheaper Too!
Rather than have several cheques to write or direct debits to set up, many people decide to consolidate their debt into one loan which means only one payment to organise. But the advantages of having only one loan don’t stop there. Had you thought that by consolidating your debt, you may be able to pay off your exisiting credit that incurs comparatively high interest charges into one where you pay a lower interest rate? You may also decide to pay this new loan off over a longer period, which means that your monthly repayment will be lower than with your existing credit agreements. You must remember however, that this may mean that you end up paying more interest over the longer term than at present, but for now at least, it could make it easier to meet your repayments each month.
What? No More Telephone Calls And Letters?
If you have lots of creditors chasing you for their repayments, a debt consolidation loan could solve these temporary problems for you. By taking out a debt consolidation loan, you can use the finance to pay off the existing creditors and earn yourself some breathing space. No more harassing calls, chasing their money!
Many people opt to organise a debt consolidation loan by releasing some of the equity in their home. Effectively, they are taking out a secured loan which as is suggested by the name, in the event of a default, the lender could enforce the repossession of the property in order to get hold of their money. You should always think hard about whether you could afford the repayments but in real terms, isn’t this what you wanted the debt consolidation loan for in the first place?
By taking out a debt consolidation loan, you could enable the lender to secure the new loan against the value of your property, and by so doing, the loan may attract a lower interest rate than you may have done with an unsecured loan. This of course, only applies if you are a homeowner and have enough available equity in your home. For tenants, there may be different options where you could still have a debt consolidation loan but by taking out an unsecured loan instead.
Debt consolidation loans are relatively easy to apply for these days. There are also many lenders and finance brokers in the UK that offer this type of facility. You could make an online enquiry in seconds and potentially have an offer within minutes. Of course, you will still need to complete and sign a credit agreement and your chosen lender may require proof of ownership of your property, proof of citizenship etc and they may also need to request an independent valuation so the whole application process may still typically take between 4-8 weeks.
Always make sure that you read and understand the terms however, and make sure that your new loan is as affordable as you need.