Over the past 20 years or so, access to instant credit has become common place and wherever you go on the high street, you will see special offers enticing people into taking credit of some kind. Buy now - Pay later offers can help spread the cost of expensive purchases.
But it’s all too easy to lose track of your commitments and to find you’ve over stretched yourself. When this happens, you'll want to consolidate.
Consolidation loans are an excellent way of getting back on track with your finances, especially when money becomes tight and there's too much month left at the end of the money!
The concept of consolidation is to restructure your existing debt into a single, more affordable payment which you repay to one lender rather than multiple payments to different lenders.
The biggest advantage provided by a consolidation loan is the reduction in your monthly outgoings.
Store cards and credit cards can become notoriously expensive ways to borrow money, particularly when the core debt can't be repaid quickly.
And when you're only able to afford the minimum repayments on these types of credit, it can take years to clear the balance.
When multiplied over different cards, the costs of simply standing still can be immense. So, to have the opportunity to consolidate your debts at a lower monthly payment level can be really beneficial.
Another advantage is having to make only one monthly payment. Before consolidating you might have multiple payments to make each month, which can become difficult to manage.
By restructuring your debt through a consolidation loan, you commit yourself to a fixed monthly payment for a fixed repayment term. Whilst often cheaper, this will be less flexible than repayments made to a credit card.
You will need to pass a credit check to be eligible for a consolidation loan and the lender may also require you to demonstrate that the loan you are seeking will be affordable to you.
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