Debt Consolidation Loans

How to choose a debt consolidation loan...

If you're tired of spending all your time juggling various sources of debt, why not get a debt consolidation loan?

You can move all your outstanding debts into one place and pay just one monthly repayment at an affordable interest rate.

These loans are good for:

Multiple debts
If you have debts from a variety of sources, including:

• Credit cards
• Unsecured loans
• Overdrafts
• Store cards

A debt consolidation loan could help take the stress out of managing these debts by amalgamating them in a single loan with one rate of interest.

Repairing your credit rating
It is all too easy to get caught in a vicious and seemingly endless vortex of repayments on many high interest debts. A debt consolidation loan - despite not reducing the actual amount you owe, or the amount of interest you pay each month - should allow you to control your finances better, and pay the debt of in more affordable chunks, over a longer period of time.

These loans are unsuitable for:

Undisciplined spendaholics
The idea of a debt consolidation loan is to group your debts together and pay them off as one.

However, after years of struggling with finances it is easy to see yourself in a better financial position, now that there is just one bill arriving each month. The temptation to borrow more from credit cards and store cards can be an easy trap to slip into and before you know it you will be in a worse position than before!

Look for:

The best deal
Before you go ahead and sign yourself into a contract, make sure you are getting the best deal possible for your personal financial position.

ChooseMoney recommends comparing at least 3 companies before you make a final decision.

Look for the best rates of interest and whether or not the rate in question is:
Fixed: This means that the APR you are offered will remain the same throughout the duration of the loan.
Or . . .
Variable: Meaning that the rate in question will rise or fall in line with the Bank of England's base rate.

Watch out for:

Unscrupulous lenders
By and large lenders are very reliable and will try and offer you competitive rates that you can afford, to help you get back on track. Inevitably, however, there will always be lenders looking to take advantage of people in vulnerable positions.

This is particularly true when it comes to debt consolidation loans, as lenders are aware that many people wanting to consolidate their debts are in no bargaining position and need to sort things out fast.

Make sure you look for the best rates available. Don’t get bullied in to choosing the first company you see advertised!

Don't forget:

Who you owe the money to
When you take on a debt consolidation loan, what really happens behind the scenes is that the company you move the money to, pay off your original debt and start a new one with them.

Compare debt consolidation loans