Is a debt consolidation loan right for you?
As the UK continues to struggle with the ongoing cost-of-living crisis, some institutions are advising Brits to seek financial help. With many people now considering a debt consolidation loan, the question is: is it right for you?
According to financial capability charity The Money Charity, the total unsecured debt per UK adult in February 2022 was £3,771, while the average total debt per UK household was £63,803.
With the cost of living crisis also cranking up the financial pressure facing UK households to near unbearable levels, news that inflation has risen for a ninth consecutive month to 9.4% is not what anybody was hoping to hear. It does, however, send a clear message to us all: there’s never been a more important time to keep a close eye on your money and make sure your debts are properly managed.
Echoing that sentiment is the Financial Conduct Authority (FCA) and Government-approved online advice service MoneyHelper, both of whom are recommending that Brits should actively seek help if they’re struggling financially. As a result, many people are considering a debt consolidation loan, one of the most effective ways of dealing with debt.
So what exactly are debt consolidation loans and what benefits do they offer?
What is a debt consolidation loan?
A debt consolidation loan is a loan taken out by an individual in order to pay off their existing debts. The individual uses the money from the debt consolidation loan to pay off the people or companies to whom they owe money, then repays the loan in monthly instalments.
Debt consolidation loans can be used to pay off different types of debt, such as overdrafts, credit cards, personal loans or store cards.
Why do I need one?
Taking out a debt consolidation loan is an effective way of taking back control of your finances as it allows you to immediately pay off all your debts and leaves you responsible for just one repayment per month.
When you have several lenders to repay each month, it can be easy to forget to make a payment, especially if the repayments are for different amounts and due on different dates. Needless to say, this makes budgeting and general money management much more difficult.
Because bigger loans often come with lower interest rates, debt consolidation loans can also lower your monthly repayment amount, reducing your outgoings. The repayments can also be spread over a period of time that is more suitable for you, which could potentially lower your monthly repayments too.
What if I’m too embarrassed to ask for help?
With debt, a serious issue that affects many households in the UK, taking out a debt consolidation loan seems like the obvious thing to do. Unfortunately, another issue is preventing people from doing so – embarrassment.
According to the FCA, embarrassment causes some 52% of borrowers facing financial hardship to wait more than one month before seeking help, with 53% of these regretting not doing so sooner and feelings of regret increasing exponentially the longer they wait.
While it is perfectly understandable to not want to discuss your finances if you are experiencing debt, it is important to recognise that, with the cost-of-living crisis dragging on, the stigma attached to being financially unstable is quickly disappearing as more and more people find themselves in the same boat. It is also worth remembering that financial help is available from reputable lenders to anyone who needs it, with no judgement attached.
Bring your debts under control with a loan.
Our Debt Consolidation loans enable you to borrow as much as £25,000 with rates starting from as little as 3.4% APR, allowing you to consolidate any existing loan, credit card, or overdraft into one monthly repayment. We’ll even repay your lenders directly, so you don’t have to.
With no hidden fees or charges, no early repayment penalties and free loan protection of up to £10,000, one of our Debt Consolidation loans could help you improve your financial well-being today. For more information, click HERE.