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Debt Consolidation Loans.
Many of you will be familiar with debt consolidation loans: they are widely advertised and widely available, offered by high street banks and supermarkets, loan companies and building societies.
The plus is that you make lower, affordable repayments.
What is a debt consolidation loan?
This type of loan allows an individual to make just one monthly payment to address their debts and are most commonly used to stem the tide of interest on credit cards and overdrafts. The plus is that you make lower, affordable repayments, but usually over a longer period. So, whilst this may seem attractive in the short term, you can end up paying more in the long term.
There are two different types of consolidation loan: secured and unsecured.
A secured loan is usually taken out against the value of your house meaning that if you are unable to keep up repayments, your house could be repossessed by your creditors.
Things to consider...
There is a risk that you will continue to stack up interest on credit cards or store cards, and the overall amount that you pay back may turn out to be significantly more than the original loan. If you lose your job, the situation can become very problematic and your property is at risk if you do not keep up repayments on a loan.