There are no hard and fast rules concerning debt consolidation as every case is different and depends on several factors. There are some guidelines that can help you decide however. Lets talk about some of them here today.
First, for those who do not know what debt consolidation is, a brief overview. Debt consolidation replaces many smaller debts, payments and outgoings to multiple debtors with one debt (or loan) and one larger monthly payment.
The first thing to understand is where your money is going, what interest rates you are paying and where you can save. Here are a few areas to look at:
Carrying a large balance on credit cards and store cards. If you do not pay your credit card balance every month, you are likely paying a high interest rate on the balance to the credit card company every month. Usually, the interest rate is very high on credit cards, up to and above 20%. Store charge card interest rate is usually even higher, sometimes between 20% – 30%. Wow, that is expensive.
Car loans and boat loans. These loans are typically not as expensive as a credit card debt, but usually is higher than a debt consolidation loan. Check the interest rate you are paying on these types of loans.
Unsecured personal loans. Again not as expensive as credit card debt but can be high compared to other secured loan options.
Lines of credit and overdrafts. Do you carry a balance on your line of credit or overdraft every month? If so, find out what you are paying and what the interest rate is. You may be able to save money here.
Layaway plans and no money down consumer deals. Did the ‘no money down’ deal sound good when you bought that new flat screen TV, furniture, appliances or other consumer purchases? Maybe it was easy and sounded good at the time, but usually these deals get expensive over time. They lure you in with no down payment and you pay off the item over several years. If you don’t know, you had better check the interest rate they are charging you, it could be outrageous.
Too many creditors. Do you have to go through the hassle of paying many bills to many debtors every month? Writing, cheques, sending payments, invoices, emails, worrying that each payment went through are all part of the headache of having too many bills to deal with every month. With debt consolidation, you can get rid of these hassles and just have one monthly payment to one lender. Simple.
Monthly payments too high. Are any of the above or combination of the above situations causing your monthly payments to be more than you can afford? A UK debt consolidation loan might be the right solution for you to save money and lower your monthly payments to a manageable level.
So what next? Get some quotes for several debt consolidation loans. You can do this right here by filling out the form on the side of this page. Your details will be matched against a large number of loans and lenders and a loans specialist will get back to you with a selection of the best UK loan deals on the market.
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