Find out how debt consolidation could help you

Debt consolidation is the process of replacing lots of debts with one single loan. It leaves you with fewer payments to worry about every month - and your payments could be lower.

You can find out more about how debt consolidation can help here - or read on to learn more.

Debt consolidation advice

When consolidating debts, finding a loan / mortgage with a lower interest rate than you're paying at the moment could help to reduce the amount you pay each month. Also, a loan that's spread over a longer period can carry a lower interest rate than a short-term loan.

When you consolidate debts, ask your lender how much interest you'll pay overall. A loan with a longer repayment period can cost more in interest overall, even if it does lower your repayments, because the interest will have longer to accrue.

Also, once you're making lower repayments, you may want to avoid taking on any more debt. To avoid temptation, you could throw away your other credit cards and close any existing overdrafts.

You can find out more about debt consolidation for homeowners here.

When to consolidate debts

One reason people consolidate debts is to find a way to repay debts comfortably. Done correctly, it gives you extra leeway in your budget, it allows you to repay your debts in full at a rate you are comfortable with and it could prevent damage to your credit record for missed payments.

However, if you can't afford your debts, then you shouldn't take out another loan, because it won't address the underlying problems with your finances. Instead, speak to a debt adviser, who may suggest a more appropriate solution such as debt management or insolvency. Debt consolidation is really just moving your debts to another place. If you can't afford them now, you're probably not going to be able to afford them with consolidation either.

Click here to contact a debt adviser about debt consolidation.

Other forms of debt consolidation

There are other ways of consolidating debts that don't involve a loan. These are aimed at more serious debt problems, and include:

• Debt Management
• IVA (Individual Voluntary Arrangement)

These other forms of debt consolidation leave you with one monthly payment without the need for borrowing any more money, although they will damage your credit record for six years and will make it difficult to borrow money again.

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Tags: debt, debt consolidation, debt consolidation loans, loans, remortgage, homeowners

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