Consolidating Debt

Posted by Ben Ryland in Dealing with Debt on 9 January 2017 - Ben is a Senior Credit Analyst at checkmyfile.

Do you have what seems a never-ending mountain of debt and you’re struggling to know what you’re paying and to who? If so, you may be considering debt consolidation, in particular a debt consolidation loan.

A debt consolidation loan is most suitable for those borrowers who have multiple repayments going out each month to different credit providers, normally at different times of the month. Not only does this feel like you are constantly making repayments during the month, but keeping on top of what you’ve paid and when can be a logistical nightmare.

The loan allows the borrower to make one monthly repayment at a fixed rate to clear the debt included in the loan amount, rather than numerous smaller payments over the month.

Although the monthly repayment amount will likely be larger than any of the single monthly repayments you would be making, by having all the debt ‘under one roof’ the consolidated repayment brings everything together and you may be paying less each month for the loan repayment.

A significant advantage of taking the debt consolidation route is that it can take away the hassle and stress of dealing with multiple debts from numerous lenders. Depending on the number of separate repayments being made a month this can fast become an administration nightmare, and if you’re not the most organised person debt consolidation can help to keep the admin side in check – you know what you’re going to be repaying, when and to who.

A single repayment amount a month can also help your household budget effectively, safe in the knowledge you know specifically the consolidation loan repayment amount. As household budgeting is an excellent way of keeping your finances in check and under control, knowing your high number of debts are being paid via this loan method can make sure you have the funds available and if there’s any extra left over.

There is also the likelihood that consolidating your debts to a single repayment may leave you better off if the single repayment amount is cheaper than the individual monthly repayments, as you will not be paying interest on numerous different debts at differing rates.

A debt consolidation loan may not always be the best solution and the downsides to pursuing the debt consolidation route should be considered when making the decision.

By taking out a debt consolidation loan you could well be extending the timeframe to repay your debt and this could mean more interest paid on the debt. It is crucial to check the rates of interest for the consolidation loan compared with what you are repaying on the separate debts. The consolidated amount may not be the lowest interest rate and you could be paying more over the lifetime of the loan. You should also be aware of early repayment penalties when consolidating debt that still has time to run.

When looking at consolidation loans, you may also want to try and avoid the temptation of applying for more than you need. The purpose of this type of loan is to help you become debt free, and by taking more than you need it often defeats the purpose of debt consolidation.

If you are worried about your personal finances and want to talk to someone, there are numerous debt charities which can offer you free impartial advice, such as StepChange and the Debt Advisory Service.

Check Your Multi-Agency Credit Report

30 Day Free Trial

Dealing with debt collectors

Don’t think for a moment that you’ll never see a debt collector in your lifetime. Even if you have a sparklingly brilliant credit file, you could find yourselves facing a doorstep collector.

Published on 19 Feb 2018 by Barry Stamp

Full Article

Does Statute Barred Mean My Debt is Written Off?

If you look around on the internet for debt advice you might see one questionable tip popping up from time to time: ‘don’t pay off your debts, wait six years for it to become statute barred and you’ll be home scot-free.’ If this sounds too good to be true, that’s because it probably is, and if you think it’ll be without consequence you could be in for a nasty surprise.

Published on 10 Jan 2018 by Tom Magor

Full Article

How Your Credit Score is Affected When a Default Drops Off

If you’ve got one default, you might be counting down the days until it is no longer reported to the Credit Reference Agencies. But if you have more than one, will you see your Credit Score rise as each one drops off of your Credit Report?

Published on 4 Jan 2018 by Richard Catlin

Full Article

What could happen after a county court judgment is issued

Once a court judgment has been issued but the individual still refuses to pay the outstanding debt or come up with an agreement to clear it, the claimant has a number of legal remedies available to them through the court systems.

Published on 16 Jan 2017 by George Coburn

Full Article

Facing Financial Problems

No one should feel like money problems are unique to themselves, we all have to think about money at some point. Financial problems, job security, debt and redundancy are all issues that realistically should be considered. How we react to these factors can impact our lives and our wellbeing, but luckily there are many different facilities that aim to help those trying to cope with money worries.

Published on 12 Jan 2017 by Paul Anderson Riley

Full Article

Don't give yourself a Christmas hangover

If you are concerned about debt during the festive season you should get advice now, warns the National Debtline. 5m Brits worry about money in the run up to Christmas, with one in three adults putting their gifts on credit, and if you are one of them, more debt is the last thing you want for Christmas.

Published on 6 Dec 2016 by Kelly Luff

Full Article

Students understanding of debt is seriously lacking

Christmas is an expensive time of year. Though for many students, this is just as relevant for most other times of the year too.

Published on 29 Nov 2016 by Ben Ryland

Full Article

Insolvency and its effect on your credit score

Contrary to the belief of some, insolvency is not a ‘get out of jail free card’. When you are declared insolvent, the entry remains reported for 6 years on your credit file and will continue to pose a significant barrier to your chances of obtaining credit – even after the insolvency is discharged.

Published on 17 Nov 2016 by Tom Blandford

Full Article

Number of people going insolvent in England and Wales increases by almost a fifth

Personal insolvencies saw a 20% increase in the third quarter of this year compared to the same three months in 2015, based on data released from the Insolvency Service.

Published on 3 Nov 2016 by Ben Tumilty

Full Article

Credit Card debt sees highest growth since the Recession

Household credit card debt increased by more than £500m in October, pushing the amount owed on credit cards to £66bn – roughly £2,400 per household in the country.

Published on 2 Nov 2016 by Ben Tumilty

Full Article
keyboard_arrow_left

keyboard_arrow_right

We have loads of great customer reviews