Sole Trader Debts | Debt Consolidation | Loan

What is Debt Consolidation?

Debt Consolidation is a method used by many self employed people/sole traders to consolidate their debts into one lower affordable payment, therefore making your monthly outgoings more manageable. Debt Consolidation is normally successful if you have some sort of asset to put against the loan, such as your home or a business property, also referrred to as a secured loan. This enables the provider to have some sort of security over the debt being paid.

Benefits of Debt Consolidation

• All current repayments on credit cards and loans are converted into 1 monthly payment that is generally easier to manage and keep track of




• Interest rates can be usually lower, so you may have a more affordable payment.




• Less pressure and harassment in dealing with multiple creditors




• In the long run you may save money and you will have a date when the loan will be paid off if you keep to your repayments.



• Could help your credit rating as you will be less likely to default

Disadvantages of Debt Consolidation

• Don’t be fooled into thinking you have cleared your debts. You have just shifted the debt to a different payment plan




• Be wary of interest rates. Try to get a fixed rate if you want a payment that doesn’t change




• Fees may be payable to arrange the new loan.




• If you have a poor credit rating you may have a higher rate of interest to pay which can mean it is less affordable. Another debt solution may be better for you.




• If you get into difficulties making the new payments it can be harder to deal with only one creditor if you are then looking at a debt solution for example.

 

Further information on Debt Consolidation

To discuss the matter of Debt Consolidation further, please contact us at Business Debt Advice where our team of friendly debt Advisors will be more than happy to help.