Consolidation Loan

CSS has been turned off in your browser. Please enable CSS and reload this page.

A consolidation loan is a special type of loan usually secured against your home to help those seriously in debt to recover. By consolidating all your existing debts into one large sum; you can then spread it over a longer period in order to reduce your monthly repayments to help get out of debt.

The principle of a consolidation loan is simple. You bundle up all your existing debts, which might include credit cards, store cards and other loans into one simple loan. The new loan might be over a longer period, thereby reducing your monthly repayments. As store cards can have high interest rates, you might also end up paying a lower interest rate. On the downside, if your old debts have redemption penalties, just closing them down could add to the debt you need to fix.

Apply for a free quote

The issue here is the difference between a consolidation loan and simple financial prudence. If you're sensible, part of your financial management regime should include moving any expensive debts down to cheaper debts. That's just good practice.

Your consolidation loan is secured on your house, so you should really only consider this option if your debts have reached a stage where good financial management is no longer enough to reduce your payments. You will be bundling up your unsecured debts, but if you don't put your house, you'll lose your home if you fail to keep up repayments.

A debt consolidation loan is a last resort and you should only require it if you have fairly severe problems. In around 90% of cases, they do reduce the monthly repayments, but they are not a debt cure. We recommend you speak to a professional adviser before taking this drastic step.

Apply for a free quote