This involves transferring debts with higher interest rates into one loan with a lower interest rate.
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This involves transferring debts with higher interest rates into one loan with a lower interest rate. To make this a worthwhile option the interest rate of your consolidation loan should be at a lower rate than your current credit agreements. This could enable you to make a saving on monthly repayments.
Note: Refresh Debt Advice is not a credit broker or lender. We do not provide credit services.
Debt consolidation loans aren’t right for everyone. It’s important to check all the options available to be sure you’re making the right choice. While consolidating debt often sounds like a promising solution, it could make your situation worse. It may not be an option at all if you have a poor credit history.
Whilst monthly repayments on a consolidation loan may be lower than the total of all the monthly repayments on your other loans this may only be because the loans are repayable over a much longer period of time. Again, the overall cost of the loan over the entire period can be quite high.
Unsecured means the loan isn’t linked to your home. Some consolidation loans require you to secure the loan against your home. However, if you fall behind with payments and can’t afford to repay what you owe, you’re at risk of your home being repossessed.
If you have lots of debt, or if you’ve missed payments on your debts, this will have affected your ability to borrow more money. You might find that the only way you can borrow more money is at a higher interest rate. This means that you could end up paying more money back over the lifetime (or term) of the loan.
Debt consolidation loans may be a good option if you have a lot of expensive borrowing on things like credit cards which carry high monthly repayments and high interest rates.
We recommend speaking to an expert debt adviser before taking out a consolidation loan.
Have a number of debts you with to combine into a single loan with the goal of making a saving on your monthly repayments.
Debt consolidation and debt management are two different things. It’s easy to get confused by the terminology used when trying to sort out your debts.
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