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Consolidation is when you take out a
single loan that pays off all of your existing debts. This way you only
have one loan to pay off, rather than several separate debts. This can
help you to take better control of your debt and manage it more easily.
However, it is not the best option for everyone, and before you take out
a consolidating loan you need to do some research first.
Consolidation loans can have some
possible disadvantages. In the current financial climate it may be hard
to secure a loan at a low interest rate, so you may be paying back a
larger sum overall and for a longer period. There may also be extra
costs involved in charges made for setting up the loan. Also, any loan
that is secured against your property means that should you fail to meet
payments, then your home may be at risk.
Before taking out any new loans, you
should always look to see if you have any existing options that will
help you to manage your debts. Talk to your existing lenders and see if
they are willing to negotiate new payment arrangements that are easier
for you to meet. It could be that you have credit options open to you
that have a lower rate of interest than those available with
consolidating loans, such as an existing overdraft facility, personal
loan or mortgage extension.
Free advice is available from the
National Debtline. Give them a call and they will talk through all of
your options with you and advise you as to the best way to manage your
problem. This kind of impartial advice can be incredibly helpful and
reassuring.
If you are looking for a consolidating
loan make sure that you understand exactly how much your monthly
repayments will be, the total amount that you will be paying back, how
long it will take you to pay of the loan completely as well as details
of any fees that may be charged if you miss a payment, if you want to
pay back your loan early, and what happens to your home if the loan is
secured against your property.
Do not opt for the first lender you come
across. Shopping around for a loan allows you to look for the best terms
and the best interest rates. Look for debt specialists who are
accredited by the Debt Managers Standards Association (DEMSA), such as
Baines and Ernst. They offer
debt help on their website, including an online debt test that makes
it easy to calculate whether a consolidating loan from them will be
worthwhile for you.
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