Have you ever taken a look at the actual remedies or potential cures for debt issues that are available? I'm sure that you probably have and if you're like me you will undoubtedly have come into contact with the phrase debt consolidation loan. I, like many of the consumers suffering financial difficulty in the UK have taken on a debt consolidation loan in my debt afflicted past. When I was in a worse situation than I am now, I managed to get myself a debt consolidation loan from my primary creditor and to be fair, it was a good way to manage things.
A debt consolidation loan pays off all your debts. that basically means that it frees you from the burden of making repayments to credit cards and unsecured loans mostly. These can be on an unsecured basis but in most cases they will be secured on your home and you should never forget that it will become a much bigger issue if you default on making repayments to a debt consolidation loan as well. It could be considered that you are loading yourself with another debt and there is obviously the danger of losing your home if you default repayments on this loan, however, it will give you one affordable monthly payment on one amount and that will quite often give you the breathing space you need to look at things differently.
A recent survey has confirmed a dramatic increase in the amount of the average non mortgage debt in the UK, particularly over the last 15 years, a symptom of a credit sodden society. The average amount for every single person in the UK now stands at over £4,000 in unsecured finance. This seems relatively small but when you consider that this is for every single person in the UK you begin to get an idea of the scale of the unsecured lending undertaken in the UK on a yearly basis. In terms of secured lending, mortgages secured on an almost 100% basis have also contributed greatly to the huge amount of personal financial difficulty suffered by a large percentage of the populace.
Imagine the interest accrued each month on say, a £200,000 mortgage? It is this very interest, every month, that adds to the burden of repayments of your debts. It can take many years to pay-off even a relatively small loan along with thousands of pounds in interest. In such a case, if you’re finding it difficult to pay-off the existing loan amount or struggling to cope with even your minimum repayments on loans and credit cards, a debt consolidation loan will most definitely help you.
A debt consolidation loan, whether from your bank or another lender, pays you a lump sum that can usually be paid back over an agreed period of time, often longer than usual. Most reputable debt consolidation companies also usually charge a lower interest rate than other loan providers. This lets you pay more on the actual debt amount each month. However, as with everything financial there are the good and the bad. Debt consolidation companies haven't, to be fair, received the best or most credible media attention lately and mostly because of the actions of a few bad eggs, such as companies that promise you lower repayments and eventually just end up increasing the repayment term by reducing the amount needed to be paid each month and thereby charging more interest over the longer term. It also pays to know the APR offered by the company as there is no point considering the loan if the APR is higher than the loan you already have!
Debt consolidation could be for you, it might not be, but it will certainly be worth considering as you look at the ways you can reduce your overall debt.
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