By consolidating your existing debts into a larger loan repaid over a long term could make the monthly repayments more manageable.
What are unsecured debt consolidation loans?
Consolidating your debts
If you are in the position where you have a number of debts that are perhaps from credit cards, store cards or other loans, you might be finding it tricky to keep track of them all and make sure that all of the payments are being made on time. It doesn’t take much to forget about a couple of payments and your credit score can plummet fairly rapidly if you fail to pick up your payments again. So an unsecured debt consolidation loan is one that you take out in order to pay off some, or maybe even all, of your other debts so that you only have to make one single payment each month. This then makes it easier for you to manage, and much less likely to miss a payment.
Where can I get debt consolidation loans?
You can get unsecured debt consolidation loans from a wide range of lenders, many of them mainstream. Therefore if you have missed a couple of payments it is worth looking for a consolidation loan sooner rather than later so that you still have access to the best products on the market.
Pros and cons of using debt consolidation loans
Clearly the biggest pro is that you bring all of your debts together in one place so they become much easier to manage. Not only do you only have one payment to think about, your total monthly repayment is also like to be less than if you pay all of the debts separately. With a longer term consolidation loan you are also likely to be paying a lower interest rate, which can be as low as around 5%, than other debt types, particularly store cards and credit cards. However you will need to take into account any early repayment fees that are associated with your current debts.
Loan calculator - how much will it cost?
Use the calculator to see how much your debt consolidation loan will cost, what the repayments are and the overall interest you'll pay on the loan.
This calculator will give you an idea of costs. The exact amount and APR payable will be provided from the lender subject to credit and affordability checks.
Your monthly payment will be:
Interest on this loan will be:
Annual Percentage Rate (APR):
Total repaid will be:
One potential disadvantage of having a consolidated loan over a longer period is that you may end up paying more in interest over the term of the loan than if you have left them all separate. However having one loan that you can reliably pay every month will keep your credit score healthy, while lots of debts that you may miss payments on by accident will not be good for your credit score.
What to note when considering a debt consolidation loan
As with any type of loan you will have to do some research to make sure that you are making the right move and that will allow you to select the right product for you. You will need to calculate the total loan that you need and then you will need to look at the interest rates that this will attract. There are different interest rates associated with different loan amounts and sometimes is can be worth taking out a little more in order to benefit from the lower interest rate, but make sure that you remain disciplined in order to benefit most from the deals that are on offer to you.<