Loan Consolidation - Advice on how to consolidate your debts into one easy payment

Loans and Debt in the UK

The level of personal debt in the UK has risen sharply in recent years. Increasing fuel bills and the credit crunch have taken their toll on most consumers with a gloomy financial forecast predicting worse times to come.

"Total UK personal debt at the end of February 2008 stood at £1,421 billion. The growth rate increased to 8.9% for the previous 12 months which
equates to an increase of £11 billion". [source: Credit Action UK]

What is a Consolidation Loan?

Debt consolidation involves taking out one loan to pay off several others. There are several reasons why someone might wish to take out a consolidation loan:

To secure a lower interest rate than they have on existing debts.
To secure a fixed interest rate.
To reduce their monthly repayments into a manageable sum.
For the convenience of paying just one debt rather than several.

Debt Consolidation or Loan?

Debt consolidation can be confusing for many people so it is a good idea
to talk to an independent advisor before signing up to something you are unsure about. Especially if you are consolidating unsecured debt into secured debt, for example against your home or other assets.

It is worth investigating the alternatives to loan consolidation before
taking out a loan - credit counselling programs, debt settlement or bankruptcy are a few of the alternative options. In the UK, Student Loans

cannot be included in bankruptcy. This is because they are recovered from future salaries by employers, in a similar way to income tax and national insurance contributions. Because of the unique way that they are recovered, this means that they do not affect your credit rating in the way that other debts might.

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