Debt Consolidation | Consolidation Loans | Personal Debt
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.
Get debt help
If you would like information on how you can deal with your personal or business debts, please contact us at Business Debt Advice where our team of friendly advisors will be more than happy to help.
Personal Debt Solutions
An IVA is a legal agreement between you and your creditors where you pay back a portion of the debts that you owe.
A Debt Management Plan is an Informal Agreement between you and your creditors where you pay back your debts at an affordable monthly rate.
Bankruptcy should only be considered as a last resort. Bankruptcy is a way of dealing with your debts if you are unable to pay them.
Debt Consolidation is a method used by many people to consolidate their debts into one lower affordable payment.
For more on IVAs…Call our Business Debt Advice line on: 0800 0436 999