If you are someone who currently has a number of unsecured creditor debts that you are struggling to repay, then you might want to consider using a debt consolidation loan in order to reduce the strain on your finances in the short term.
In order to acquire a debt consolidation loan, you will have to acquire the services of a debt consolidation company, who will review your application for finance and take into account a number of considerations before deciding what borrowing costs and loan size to offer you. In order to have the best chance of getting the most competitive deal, you will need to be aware of which aspects of your life these firms will look at, and make the necessary moves prior to your application to exude a credible impression to your prospective lender.
The following page will outline the key things to remember when looking for a debt consolidation loan provider, so you can obtain the optimum deal in the future.
Where can I get a Debt Consolidation loan from?
There are a multitude of debt consolidation firms in the UK who provide loans to those experiencing financial difficulties. The loans are taken out in order to consolidate numerous creditor debts into one, and mean that those struggling financially can make just a single, monthly payment to one lending party.
If you are defaulting on a number of your liabilities and are subsequently being subjected to a number of late and interest charges being added to the total of your debt, then you may decide to use the services of one of these debt consolidation companies in order to simplify your monthly repayments into a single sum and bring an end to these charges.
However, you will need to keep into account that the borrowing costs, terms and specifications of the loan you are offered by one of these firms will be based on a wide range of factors such as the size of the loan you are looking to take out, your credit history, your income and expenditure and whether you wish to secure it against one of your assets or not.
Secured debt consolidation loans
Debt consolidation loan firms usually give you the choice whether you want to take out a secured or unsecured loan with them, and it is heavily advised that you avoid opting for the former as you are putting your prized assets and home at risk by doing so.
Remember, when you secure a loan against your assets, you are giving your creditors authorisation to repossess them and sell them off in the event that you fail to make full payments on time to them. This will inevitably have a detrimental impact on the stability of your day-to-day living and would have meant that you have would have escalated your financial problems further through the utilisation of a loan meant to reduce the burden of your debt.
Debt consolidation companies typically advertise their products as a ‘quick fix’ solution to your financial problems and will attempt to present the process to you as a easy way to make your debts more manageable and affordable in the short term. However, the reality is that if you are currently finding it difficult to make your payments on time for your existing debts, then debt consolidation is probably poorly suited to your circumstances as you will simply relapse into the same difficulties as present later on down the line with the larger debt consolidation loan.
Look at the terms and conditions on offer
Different debt consolidation loan providers will attach ranging terms and conditions to their products, and it is imperative you shop around and evaluate a multitude of offerings on the market before making the final decision about which provider to use. Remember, providers have differing methods of credit assessment, so you may be given a better deal by one than another.
You should also keep in mind that if you have defaulted on a number of your existing loans, that your credit rating would have been severely damaged, meaning that the rates on offer for your consolidation loan might be considerably higher than you would expect. As such, you should weigh up the total monthly costs of your loan repayments at present against future ones under the rate of your larger loan to see if it is financially worthwhile.