Debt Consolidation | Consolidation Loans

What is Debt Consolidation?

Debt Consolidation is when you pay off all your debts with a loan that covers the full amount of the debt. This leaves you with only one payment per month towards your debt (repayment of the loan), making your debts more manageable and affordable.

The monthly repayment of the loan is generally lower than what you were paying towards your other debts. The interest is normally lower on the loan than it is on your other debts and the repayment is spread out over a fixed period of time, which is usually a longer repayment term.

There are two types of loan. Secured and unsecured.

Advantages of Debt Consolidation

  • Good if you have a lot of debts.
  • Can help you manage multiple debts in one easy monthly payment.
  • Interest can be lower.
  • It could save you money long term.
  • Finances are better managed due to some monthly income being freed up.
  • You will know the date that you will be debt free.

Disadvantages of Debt Consolidation

  • Repayment time can be longer.
  • You must keep up your repayments, especially if it is a secured loan (you could lose your property).
  • Be wary of interest rates. Some loans have high ones.

Is Debt Consolidation right for me?

Debt Consolidation could be suitable for you if:

  • You are struggling to keep up with the many different debt repayments at different times of the month.
  • You are paying high and varying levels of interest on many debts every month.
  • You are struggling to pay your debts and need a lower repayment.
  • You want to free up some disposable income every month for other things.

More Debt Solutions

If Debt Consolidation sounds like something you might be interested in, you can discuss it with us at Debt Advice further, in confidence and for free on 0800 043 5133.

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