Debt Consolidation Explained

Debt consolidation is the process of combining all your debts into one easy to manage repayment. Essentially you take a loan that is used to pay off all your existing loans, leaving you with the just the one loan to repay. There are many options available, but the principle is always the same.

Why get a consolidation loan?

The reasons for getting a consolidation loan are as varied as the reasons that people get in trouble with their repayments in the first place. However, one reason that people often cite for looking to get a debt consolidation loan is that they often find it hard to keep up with all the monthly repayments coming in at different times. This makes it very difficult to plan a budget for repayment which can lead to one or more of the debt repayments being missed. The consequences of that are late fees, penalty rates and the potential for harassing phone calls. This is what can cause you to fall into a debt spiral. You struggle to meet a repayment, and as a result your debt never reduces due to the late fees and extra interest you have to pay, which in turn makes your repayments even more difficult to meet. This can go on and on.

Getting out of the debt spiral

In a situation like the one described above, a debt consolidation loan can help by grouping all the separate repayments into one. Some people say that this makes it much easier to meet their debt commitments and plan their monthly budgets knowing exactly what they owe. It also provides them with a sense of ease, as they know their debts are in control and on track to being paid off.

Isn’t getting another loan a bad idea?

Some people might think that the idea of getting a loan to consolidate debts doesn’t sound like the best idea, and on the surface it may seem fraught with danger. However, consolidating debts is a fairly common practice and, with the right advice and planning, can be a safe, stress free way of getting yourself out of debt. At the Debt Consolidation Advice Centre we will help you assess if a debt consolidation loan is right for you.

How to get a debt consolidation loan

The first step in getting a debt consolidation loan is to speak to a reputable financial services company that specialises in getting people out of debt. We have many years’ experiences at advising people with the best debt solution.

Secured vs Unsecured debt consolidation loans

When applying for a debt consolidation loan the question will inevitably come up – Will you secure the loan against some property? Whilst the specific advice for each situation is different, it is generally true that a secured loan will attract a lower interest rate and better terms than an unsecured loan.

This doesn’t mean that a secured loan is always the best option though, and you should really discuss this with an experienced professional before making your decision.

The Debt Consolidation Advice Centre employs staff who are trained and experienced to find the best debt solution for your circumstances. If you call today we can listen to your specific situation and recommend a best solution which is tailored to your circumstances.

Call today on our toll free line is open 5 days a week on 1800 501 252.

Want to find out more about Debt consolidation Loans? If you have applied for a debt consolidation loan which was refused click here to learn debt consolidation loan has been refused