Debt Consolidation

If you are struggling to cope with your various debts, including credit card debts and unsecured loans, then debt consolidation may be the solution for you.

Debt consolidation is essentially a loan that gives you the ability to transfer all your separate debts into one, easy to manage loan repayment. With a debt consolidation loan, you use the cash lump sum to pay-off all of your existing debts and then make one single, more affordable, monthly repayment until the loan is repaid.

With a debt consolidation loan, you determine the loan size that you will need to clear your existing debts. You will also determine how long you would like to repay your consolidation loan for, which will determine your monthly repayment. This will usually be based on your existing income to ensure that the repayments are affordable

Topics covered in this article:

• What are the advantages of debt consolidation?
• Is debt consolidation right for me?
• How debt consolidation loans work?
• Debt Consolidation: Secured loans

What are the advantages of debt consolidation?

There are a number of advantages to a debt consolidation loan and, depending on your personal circumstances, using this method to reduce your monthly outgoings could provide the answer that you have been looking for.

Advantages of debt consolidation include:

• All your various debt repayments are transformed into one, affordable monthly payment.
• Debt consolidation makes it easier for you to keep track of your repayments.
• With debt consolidation, you know exactly how much is going out every month, doing away with those nasty surprises when the credit card bill arrives.
• By clearing your existing loan and credit card debts, you eliminate the risk of being charged any additional interest or late payment fees on those accounts.

Is debt consolidation right for me?

Debt consolidation gives you greater control of your debts and personal finance, without having to resort to some of the more extreme measures that could affect your ability to obtain credit in the future.

If you are finding it difficult to keep track of seperate individual debts, such as loans, credit and store cards, and particularly if you are incurring charges for late or missed payments, debt consolidation could be a viable option.

To see if debt consolidation is right for you, use our free Debt Calculator to assess your situation and see if a you could benefit from a consolidation loan. Alternatively, if you would prefer to receive free, confidential debt consolidation help over the phone, feel free to request a call back from one of our trained experts.

Debt Consolidation: Secured loans

Debt consolidation loans are usually a form of secured loan that are secured against the borrower's property. If you do not own your own home, you may not qualify for a consolidation loan.

If your loan is approved, you should use the sum to immediately repay any existing debts that you may have, including personal loans, hire purchases, overdrafts and credit cards, so that you avoid any further interest or charges. You will then begin making one single monthly payment to that loan.

For more information on how this type of debt solution works, request a call back for free, confidential debt consolidation advice from a trained Debt Free consolidation advisor.

How debt consolidation loans work.

1: Your existing debts.

Prior to consolidation, it is likely that you will have various debts from a number of different creditors. It could be that you are receiving bills or repayment demands throughout the month, making it difficult to keep control of your outgoings.

2. Consolidate those debts.

You take out a debt consolidation secured loan, using the cash lump sum to repay all of your existing debts.

3. Repay the loan.

You make a single, monthly payment to repay the consolidation loan. Remember that your home is at risk if you do not keep up repayments on a loan or any other form of credit secured on it. You should also bear in mind that whilst debt consolidation may reduce your overall monthly repayments, the amount of interest that you will pay could be greater than it would otherwise be.

Source: www.debt-free.org.uk