Debt Consolidation
Debt consolidation means you take out a single loan
to pay off all your other existing debts. This often means you get a
lower interest rate, which also makes your overall monthly repayments
lower. Debt consolidation simplifies your repayment arrangements.
Unlike Debt Management, where your previous debts are not cleared, a
Debt Consolidation Loan clears all old debts once and for all.
Your Debt Consolidation Loan can either be unsecured or secured
against your property or another asset. Secured loans are less risky
for lenders and so the interest rate is lower. However, you could
lose your home or other assets if you fail to keep up
repayments.
Debt consolidation can be attractive if you have a high level of
credit card or store card debt, as card interest rates in the UK are
generally higher than those offered by banks.
The key benefits of debt consolidation are:
-
Reduced financial commitments
-
Less risk of late payment fees
