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The Lowdown on Debt Consolidation
By John Porter
Debt consolidation loans are a widely marketed solution for people with multiple creditors. Examining the facts clearly outlines why more people are turning to these kinds of agreement.
The UK is undoubtedly a nation of spenders. Personal debt has exceeded £1.3 trillion.
According to research, only little over half (52%) of the population of people could survive financially for seventeen days should they suffer an unexpected loss of income.
Even more staggering is the fact that every four minutes in the UK, personal debt rises by £1 million.
With all this money owing and no signs of a turnaround, the number of companies offering debt consolidation loans also seems to be swelling steadily.
In theory, a debt consolidation agreement sounds great - rolling all of your current outgoings into one affordable monthly sum, and taking the hassle out of dealing with numerous creditors.
A debt consolidation loan also gives you a clearer picture about the timeframe you're facing to repair the damage, which can serve to give you hope for a better future.
Unfortunately, there are downsides to debt consolidation. Without proper research you can end up paying more in interest with one loan than you were already accumulating on numerous accounts.
Another hidden cost of a debt consolidation loan can be when settling your current debts early which sometimes involve a fee. Therefore, be careful to do your sums before proceeding further.
It's also important that you remember just because you have consolidated your debt, it doesn't give you the right to start spending again - the amount you owe remains.
There are of course alternatives to debt consolidation loans. For example, those with large debts (usually over £15,000) can apply for an IVA where a chunk of the money you owe can be written off.
A debt consolidation loan is advertised as a 'quick-fix' to your mounting debts, but in reality should be meticulously examined, to ensure it makes good financial sense for you.
For more information see http://www.debtcounsellors.co.uk
About the Author
John Porter is a senior debt counsellor at The Debt Counsellors, who provide free advice on IVA and all personal and business debt problems. See their website at: http://www.debtcounsellors.co.uk
Article Source: http://www.simplysearch4it.com/article/47143.html
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