In general, consolidation means combining a number of things into a single thing. That means merging multiple things into one single piece. Debt consolidation rolls high-interest loans into a single, lower interest payment such as credit card bills, utility bills, medical bill, or any other prior debts. You are making the minimum monthly payments against each of debts but still, your debt is stacking up – then – its high time for you to pull up your socks. Consider Debt Consolidation Loans that might relieve you from all the piled up debts that need your undivided attention.
If you have unmanageable piles of debt, then consolidating them into a single one will help you to deal with them in an easy manner. With multiple debts, you have to make multiple payments and it is not always possible to remember all the payment due dates. Moreover, it becomes quite challenging to repay all the loans while also managing regular expenses.
How does a debt consolidation loan work?
The general concept of debt consolidation loan is to combine all your unsecured debts into one. Rather than paying different rates of interest for different debts, you will have to pay a single-interest debt. Sometimes, these loans help in saving money. That is the reason many people opt to take out debt consolidation loans– to ease the repayment process and to become debt-free effortlessly.
These loans are unsecured and don’t require you to pledge any collateral or assets. In addition to that, you do not require any guarantor to vouch for you. A guarantor is a person who co-signs the loan application with you at the time of borrowing. If you default on the repayments, the guarantor has to repay the loan amount to the lender. While if you borrow an Unsecured Debt Consolidation Loan, you have to become your own guarantor.
When to consider a debt consolidation loan?
Consolidating your debts is a good idea when you stop adding up more debts to the stack. If you find your debts to be unmanageable and you find that all the money goes towards the debt repayment – then you must consider consolidation.
Consolidate your debts if:
- You are ready to steer clear your debts and lead a debt-free life.
- You are tired of shuffling multiple unpaid bills every month.
- You want to save money by paying less towards interest charge.
Precisely, if you are overwhelmed by the pending bills that give you a nightmare, you must take a step towards building a better and secure financial future.
Advantages of debt consolidation
A number of benefits can be gained by combining multiple debts into a single loan. And also, it is important to know the advantages before you take the decision to take on new debt. Though it will help you to consolidate your debts, still it is a debt. A few major advantages of this loan are listed below:
There is no risk to your personal property as the loan is unsecured. Even if you default on the loan, any of your personal property will not be at stake.
- Credit score
By not paying your prior debts, your credit score may have been damaged. If you repay this loan on time and in full, your credit score will improve gradually.
- Single bill
Against all the bills, you just have to pay one single bill every month. That will provide you with a financial breathing space to manage your regular and unavoidable expenses.
- Out of debt
Once you start repaying your prior debts timely, it will pave a path for you to over the debt stress. All your unpaid bills will be repaid and there will be no need for you to ask for any debt settlement.
Points to ponder over while considering debt consolidation
While taking the decision of consolidation, you need to be honest with yourself. Decide what exactly you want to do in order to arrange your debts. Consider the below-mentioned points before making any firm decision:
- Don’t add debt
Once your debts are consolidated, do not take up new debt. If possible, avoid using a credit card for any of your purchases. You have to control your impulse if you need a concrete resolution. Adding news debts is not going to help you rather it will pull you deeper into the debt trap.
- Pay as much as possible
There is no hard and fast rule that states you cannot pay more than the amount due. If you get some extra funds in a month, try using it towards the repayment. It is quite normal to spend that extra money on yourself but repaying more towards your debts will help you become debt-free faster.
- Stick to your goal
Calculate how much you have to pay every month and make a budget accordingly. Once you have a clear goal in your mind, try to stick to it. Determine when you will be debt-free so that you can manage your household expenses in a smooth and efficient manner.
- Fees and charges
Always check the fees and charges that you will have to pay when you consolidate your debts. That is why you must compare various credit providers before you choose an offer. Go for offers that have a lower rate of interest as this will help you save money.
Opting for a debt consolidation loan in the UK is not the only way to manage your debts. The idea might be appealing, but there are other alternatives that you must consider. Debt management is a serious issue and you must gauge each and every step before rushing towards a firm decision. Everyone who has debts have to manage it as there is no other way out. A debt consolidation loan can help you get back on the track if you use it wisely.
To apply for a debt consolidation loan with us, click here.