The benefits of a debt consolidation loan

If you reach the situation where you are having difficulties paying back your monthly loan repayments, then you should contact your lenders straight away. You will get no sympathy if you simply miss payments, but you might get a helping hand if you contact them as soon as possible, and get the situation under control. They may allow you to make underpayments until your financial circumstances improve again.

Some organisations can offer free advice and guidance when you are having problems with debt. The Citizens Advice Bureau is one example. If you contact your local branch, they should be able to give you a booklet on how to deal with debt. It may also be possible to speak to someone in person at your local office.

Another group that can offer similar assistance is the Consumer Credit Counselling Service. This provides an entirely free service on a freephone number. They can also send you self-help packs, give counselling sessions over the phone, and in some areas arrange a face-to-face meeting. They can also negotiate with creditors on your behalf.

An organisation such as this should be able to give you some advice on the best strategy to move forward with your debt problems, and they will also know the right questions to ask you to ensure that you will receive any benefits to which you are entitled, and help you write letters to your creditors. If it reaches the point, then some may even attend any court hearings with you.

Whatever you problems with debt, however, the best thing you can do is to take immediate action. Any delay in doing anything will certainly make the problem worse in the future.

One thing you could consider is a debt consolidation loan.

You might have debt in various different ways: credit cards, store cards, bank overdraft, loans. If you do have more than one kind of debt then it can be difficult keeping track of your spending and the variety of interest rates (possibly high) that you have to contend with.

Getting a single loan to pay off all these debts, and leave you with one is known as debt consolidation.

Remember that although you are getting a new loan, it is not in addition to the others, but it is a replacement. It has the advantage that managing your debt will be easier, and even more importantly, you should be able to get the single loan for a lower APR than the confusing, and possibly high, rates of your current multiple debts.

If you do decide to go down the route of a debt consolidation loan, then you need to get our spending under control. If you consolidate your debts into one loan, then your overdraft will be cleared, your credit cards will have no outstanding balance and you will have no other loan. This may tempt you to start spending again. No, no, no! You must resist the urge to spend again.

The interest rate is going to be the key factor when you are looking for a debt consolidation loan, and you need a low one. It might be an advantage to get a flexible loan in which you can pay back more than the monthly requirement if your circumstances should change for the better.

Secured loans usually have lower interest rates than unsecured loans. The reason is that they have the security of your property should you default on the loan. So, firstly you need to be a homeowner, and secondly you need to be aware that you could lose your home if you fail to keep up repayments on a secured loan.

You should try to keep the length of the loan as short as possible in order to keep the amount of interest you are paying to the lender as low as possible. Having apparently lower repayments over a longer period might seem a good idea, but look at the total you will have to repay and the longer the period, the more it will be.

A consolidation loan will probably come with an offer of payment protection insurance, which is designed to cover if you can’t keep up with repayments due to injury or similar. They can be expensive, but they give you peace of mind. You should always check the conditions of a payment protection plan.

Here are a few consolidation loan providers.

Norton Finance has been established many years and is now one of the largest independent finance brokers in the country. With around 300 highly professional and experienced staff, they offer a wide range of loan solutions.

Mysortofloan.co.uk is offering a secured loan with nothing to pay for the first six months. For example, you get your cash on the 1st January and you don’t have to pay anything until 1st July.

With Magic Loans you can decide how much you want to borrow, from £5,000 up to £100,000 and over what period from 3 to 30 years. They will then find a loan to match your request and your circumstances.

As a major UK financial services group, the Alliance & Leicester is dedicated to the provision of financial products that give genuine value for money.