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

Do I Have a Default? How to Find Out

For lots of lenders, coming across a default on your Credit Report is a troubling sign. It’s certainly more serious than a missed payment or arrears on your file, which are likely to have less of an impact on your chances of being approved. A default represents a key moment in the eyes of a lender: it shows that on a previous credit agreement you stopped being a borrower and became a debtor.

Published on 31 Aug 2018 by Jamie Mackenzie Smith

Full Article

Can you go to prison for debt

The short answer is: yes, you can go to prison for debt. But it’s highly unlikely, and there’s still a lot you can do to help keep yourself or a loved one out of that situation.

Published on 22 Aug 2018 by Barry Stamp

Full Article

Northampton Court CCJ – Why is it on my Credit Report?

If you’ve been issued with a CCJ, chances are that it could appear on your Credit Report as having come from Northampton County Court Business Centre (CCBC), even if you or the claimant have no ties with Northampton whatsoever.

Published on 31 Jul 2018 by Jamie Mackenzie Smith

Full Article

What Happens When You Miss a Payment?

Late payments are a common entry on Credit Reports and can occur against all credit agreements – everything from mortgages to store cards. Unless you have a Direct Debit set up to make repayments automatically each month, you’re reliant on remembering to physically make your repayments each month and inevitably, mistakes happen.

Published on 6 Jul 2018 by Kiah Phillips

Full Article

If I Pay My CCJ Will It Go Away?

2017 saw the highest number of County Court Judgments (CCJs) issued in England and Wales since records began in 2005, according to official figures by Registry Trust. That means it’s more important than ever to make sure you know what to do if you get issued with one, and how to prevent one appearing on your credit file in the first place.

Published on 23 May 2018 by Ben Ryland

Full Article

Do I Have a CCJ? How To Find Out

How to check for a CCJ

A County Court Judgment (CCJ) is generally only issued by a lender once they have exhausted all other methods though following a CCJ additional tactics can be deployed such as the use of bailiffs.

Published on 23 Mar 2018 by Jamie Mackenzie Smith

Full Article

Understanding a default notice and what to do when one arrives

No one wants a default on their credit file, but sometimes there’s little you can do to prevent it. Perhaps your household income dropped due to redundancy, you’ve suffered an illness or an unexpected large expenditure has cropped up. Whatever the reason, in times of hardship financial commitments are often among the first things to be affected.

Published on 21 Mar 2018 by Ben Ryland

Full Article

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 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
keyboard_arrow_left

keyboard_arrow_right

We have loads of great customer reviews