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Pros and Cons of Consolidation Loans
Advantages:
• You will be making one monthly payment on one loan rather than many payments to different creditors.
• Your monthly payments may be lower, or at least should not be any higher.
Disadvantages:
• You can expect to have to pay fees in connection with the arrangement of the loan: always ask for full details in writing of what those fees will be.
• If you have a poor credit rating you may not be able to get a loan, or you may be offered poor terms and conditions, for example at a high rate of interest.
• If the loan is secured on your house or other asset, then it could be repossessed if you do not keep up with the payments.
• Interest rates often change over the loan period, making it difficult to work out what the total cost of the loan will be: check if the interest is fixed or variable.
• Consolidation loans are often offered over a longer period of time than your original loans, which means that even if the interest appears reasonable, the length of time you have to repay can increase the overall cost of the loan significantly. This means that in the end you pay more.
• If you don’t clear all your existing borrowing, then the new loan is likely to make your debt problems worse and make it more difficult for you to make all your repayments.
Getting in touch with an expert for free advice is as easy as picking up the phone. Call us on free phone 0800 169 1536.
If you would like one our experts to contact you to discuss your financial position and how we can help, please send us your details so we can arrange a call back at a time that is convenient to you.
If you are not sure about the extent of your problem then try filling in our online Debt Calculator. This will help you calculate how much money you have left over each month to pay your debts (creditors)