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Many people in the UK are burdened with debt. Common types
of debt include credit cards, store cards, bank overdrafts
and unsecured personal loans.
There are two big problems with these kinds of debt:
- They incur high rates of interest.
- It is all too easy to get even more into debt.
Very often people slip into debt gradually, perhaps because
of some change in their lifestyle. Often a vicious circle takes
over, with debts piling on debts. If you find yourself in this
situation, it is important to take control and to begin climbing
out of debt.
Benefits of Debt Consolidation
For many people, a debt consolidation loan offers a practical
solution to this problem. There are two key benefits of a
debt consolidation loan:
- By replacing a set of loans (credit cards, overdraft, etc)
with a single loan at a fixed rate of interest, you can begin
to regain control over your finances.
- By securing the loan on property (i.e. your home) you can
borrow at a much lower rate of interest, and reduce your
monthly repayments by up to a half.
Pitfalls
It seems that a debt consolidation loan is likely to solve
a lot of problems, so what could the downside possibly be?
Simply stated, the reason why a debt consolidation loan is
not a universal solution to the problem of debt is that once
you have cleared your overdraft and credit card bills and reduced
your monthly payments, you may be tempted to start spending
again, running up further debts and ending up in an even worse
state than before! That does happen, and before taking out
a debt consolidation loan, you need to ask yourself whether
you would be likely to do the same. If you cannot honestly
answer "no", then a debt consolidation loan may not
be right for you.
When is a debt consolidation loan the right solution?
A debt consolidation loan will be the right answer if you have
temporary slipped into debt (perhaps due to a change in personal
circumstances) and want to get out of debt faster. It can
cut your interest rate and your monthly repayments and simplify
your finances, putting you back in control. By securing the
loan on property you are making the most of your available
assets.
The benefits are that you can cut your monthly bills and at
the same time pay off your existing debts in a controlled timescale.
You can also use the loan to free up an additional sum of money
for any purpose, for example to buy a car.
When is it NOT the right solution?
If debt is a way of life, if you have consolidated debts before,
or if you don't trust yourself to use the opportunity to
climb out of debt, then a consolidation loan may not be the
answer. For example, if you aim is to clear your credit cards
or store cards so that you can start spending on them again,
you may be headed for further trouble.
What next?
If you are a UK homeowner,we can find the best possible secured
loan to fit your circumstances. Start now by competing
our online application form to get your finances back
under control. |
