If you’ve got lots of different debts and you’re struggling to keep up with repayments, you can merge them together into one loan to lower your monthly payments.You borrow enough money to pay off all your current debts and owe money to just one lender.Consolidating all your debts into one loan might appear to make life easier but there may be better ways to pay off debts.
If you can’t stop spending on credit cards, for example because you’re using them to pay household bills, this is a sign of problem debt.
You should get free debt advice before taking out a debt consolidation loan.
If Steve switched to a debt consolidation loan over the same repayment period, he would only pay 12.6% interest.
It would cost him £3,529.30 in interest and fees to pay off his debt.
There are two types of debt consolidation loan: Debt consolidation loans that are secured against your property are sometimes called homeowner loans.
You are more likely to be offered a secured loan if you owe a lot of money or if you have a poor credit history.Steve would save £616.69 by switching to a debt consolidation loan.You should get free debt advice before you take out a secured debt consolidation loan.Get free debt advice now Consolidating debts only makes sense if: Before you choose a debt consolidation loan think about anything that might happen in the future which could stop you keeping up with repayments.Get free debt advice now Steve pays a total of £435.83 in interest and fees each month.If he sticks with his current loans it will cost him £4,145.99 in interest and fees to pay off his debt.