Debt Consolidation
What is Debt Consolidation?
If you have a lot of independant debts, say credit card debt, loans, overdrafts and the likes, then
debt consolidation is a means of taking all these debts and gathering them into one monthly payment. The purpose of debt consolidation is to help you better manage your debt problems.
The way debt consolidation works is by collating all of your existing debts and paying them off with one large loan. Then, the only payment you are left with is the repayment of that particular loan. The repayments are normally lower and over a further extended period of time. Therefore making your payments more manageable.
Debt Consolidation Example
| Example Debts | Example Solution |
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You borrow a debt consolidation loan of £10,000 to pay off all these debts. The payback interest is lower, the repayments are lower and it is also possible to extend the repayment period to reduce the payments even further. |
Is Debt Consolidation right for me?
Debt consolidation can be appropriate, depending on the amount of creditors and different outgoing bills you have. If you are
- Fed up with paying out to lots of different creditors and having difficulty keeping on top of the payments.
- Confused with the varied amounts and levels of interest on all your debts and you would like one overall rate.
- Wanting to reduce your monthly bill budget.
- Wanting to find an easier way to paying off all your debts and becoming debt free.
nb.* The suitability of consolidation also depends on the level of your debts. Sometimes there are better options for you.
Advantages of Debt Consolidation? |
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Repayments are converted into 1 easy monthly amount and is easy to manage and keep track off |
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Interest rates are usually lower |
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You will have less pressure and harrassment from creditors |
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In the long run, you may be saving money |
Disdvantages of Debt Consolidation? |
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Don't be fooled into thinking that you have cleared your debts. You have shifted the debt into a different payplan |
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Be wary of interest rates. Look for a fixed rate |
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Be wary that you will not fall behind with this loan repayment. Be vigilant, as it is a new start for you. |
Debt Consolidation Frequently asked questions
How much can I reduce my monthly payments by?
This depends on exactly how much money you are paying and how long you want to repay the loan borrowed. Reductions in monthly payments can be highly reduced.How much can I borrow?
There are a variety of factors which dedicate how much you can borrow. Whilst your income and, for secured loans, the equity available in your property are key, the main one is that you can afford to make the monthly repayments.Over what length of time can I spread my repayments?
This is entirely up to you and will depend on how much you can afford each month. Most loans are usually available over 3 to 25 years, though some mortgages can be spread over a longer period of time, depending on your circumstances.Can I use the loan for more than debt consolidation?
Certainly. Consolidating your existing credit allows you to free up money for other things. You can borow extra for that new car, boat or caravan, to pay for your dream holiday or you can have the new windows or conservatory put in. The choice is yours. Just remember, you are paying off debts and do not over-borrow.What if I have an accident, become ill or get made redundant?
Some companies will arrange accident, sickness and unemployment cover if you want the added peace of mind this brings. Life assurance is also advisable. We would strongly advise that you consider very carefully before taking cover as it can be very costly to do so as some companies charge too much for this.Can I move house if I want?
Absolutely. If your consolidation loan is secured against your house then you can use the proceeds of the sale to pay the outstanding balance of the loan or, where you are moving to another property, you may be able to transfer it to your new home. Contact us and we can provide you with some options that may be suitable for you.Are you like the many thousands of people suffering from debt in the UK? Do you want to lower your monthly creditor payments and start living again? Do you want to stop your creditors calling and harassing you? Do you want a totally FREE & CONFIDENTIAL debt solution now? We, at McCambridge Duffy can help. Call 0800 043 3328 now or get in touch via the contact details below. |
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