Debt Consolidation Loans

Personal Debt Consolidation Loans available in the UK

1:    A debt consolidation loan is NOT always the best debt solution to select.

2:    A debt consolidation loan can combine a multiple number of credit agreements into one new        agreement.

3:    If a person considers a debt consolidation loan it is important to know if this will actually help them or not, debt consolidation loans can simplify finances if there are many credit        agreements involved but they can also complicate matters further if not considered correctly.

4:    Debt consolidation loans are usually arranged by banks and other lenders.

5:    The amounts and rates of interest offered by lenders for debt consolidation loans differ but are usually arranged between £3000 - £250000 subject to credit status

6:    Debt consolidation loans are available secured against items of value, or unsecured. If unsecured the level of funding / borrowing offered is usually under £25000.

7:    People are not advised to take out a debt consolidation loan if they are securing it against a property / home.

8:    The rate of interest charged for a debt consolidation loan is always subject to the credit status of the person who is applying.

Below are the Pros and Cons of Debt Consolidation Loans in England, Wales, Scotland and N. Ireland;

The Advantages of a Debt Consolidation Loan

  • Debt Consolidation loans offer one affordable monthly or weekly repayment.
  • Consolidation loans can usually combine all credit agreements into one consolidated new repayment.
  • Reduce the total interest that would have been repaid if accounts were not consolidated, this is NOT guaranteed and is subject to the cost of a new consolidation loan.
  • Can assist in helping to avoid Bankruptcy, an IVA, or a Debt Management Plan.

  • The Disadvantages of a Debt Consolidation Loan

  • Dangerous if you should suffer another change in circumstance and be unable to repay the new loan.
  • Dangerous if secured against a home, if the homeowner starts to default on the consolidation loan, this can result in the debtor losing their home due to repossession.
  • The amount saved by consolidating will depend upon the type and period of the new loan.
  • The information on an individuals credit file can influence lenders decisions and in turn increase the cost of borrowing.
  • Information held on a credit file can affect a consumer when trying to obtain a debt consolidation loan.
  • Lenders prefer to secure debt consolidation loans against property if the applicant is a homeowner, offering the lender "reduced risk" should the debtor fail to repay.