A Consolidation Loan

Consolidation Loan Help and Advice

A consolidation loan is a loan which allows you to combine all your existing credit agreements, such as credit cards, store cards and personal loans into one. You will then make repayments to a single lender.

A consolidation loan may also give you the opportunity to repay your existing debts over a longer period of time.

Considerations before taking out a consolidation loan.

Before taking out a consolidation loan it is vital that you compare the interest rate being offered by this new lender to those rates being charged by your existing lenders. Other questions you should ask yourself or any potential lender include:

• What are the monthly payments and can I afford them?
• Do the lower rates of interest apply for the whole period of the loan?
• What is the total cost of the loan?
• What is the period of the loan?
• Are there any upfront fees or periodic charges - such as late payment charges?
• Does the loan convert unsecured debt to debt secured upon my property?

Be particularly careful if the consolidation loan is to be secured on your house, as failure to make the repayments may cost you your home - see Remortgages.

Whilst care should be exercised before taking out consolidation loan, they can be of use if they reduce the amount paid each month in interest provided they do not come with onerous repayment terms or put you at risk of losing your home.

How can we help with consolidation loans?

Although The Debt Help Line does not itself provide loans, we do have contacts with various financial institutions, finance brokers and independent financial advisors who can provide the appropriate assistance.

Call us on 0800 88 18 274 to find out how we can help at the Debt Help line