Debt Consolidation Loans – What Are They?
Debt is an interesting thing, it quite often creeps up on you before you realise what’s happening and then it drags you under, gripping hold of you like a drowning person and under you go before you’ve had a chance to catch your breathe.
Who’s to blame?
Large scale debt is a new phenomenon in our society. Its cause is the existence of readily available money and a brain-washing of us all into believing that what we need to make ourselves happy are ‘things’. Things like nice cars, nice clothes, nice houses. The belief that we are somehow judged by what we have and if we have lots of stuff that is bigger and newer than our neighbours we are somehow better than them… and we will be happy.
The TV and advertising media in general are primarily to blame for creating and perpetuating this myth. The finance companies enable us all to take part in it. Of course things like nice cars, nice clothes, nice houses are lovely to have, but we need to be aware of how we pay for them. We can spend wisely to get the nice stuff, or we can spend foolishly.
The ups and downs
Debt is a very easy downward path to follow, but once you’re at the bottom of the valley the road out the other side is quite a tricky one to find. A debt consolidation loan can sometimes be the answer. This will not be the solution to everybody’s debt, but it can be one way out.
Like most other loans, a debt consolidation loan can be secured or unsecured and there will be a lender out there willing to provide you the funds even if you have a poor credit rating or CCJ’s.
One simple payment
The idea of taking out a further loan, in many occasions a secured loan, is so that you stop paying several amounts each month into your debt and combine all that you owe into one package. This one loan should be at a lower interest rate and will enable you to see your monthly income and expenditure more clearly; helping to avoid the bills you may forget about each month when you have many debtors to pay.
One simple payment can help you work out your debt. Depending on the amount of the loan the term of the consolidation loan may me quite long, anything up to 20 years. Although this may seem like a long time now, you never know how your finances might change in the next few years and what might happen to enable you to pay off the loan early.
For this reason, always check for any early settlement fees and think carefully about how much you can realistically afford to pay into the loan each month. There is no point at all in taking out a loan with monthly payments that you still can’t afford!
Shop around
When you’re looking for a loan to consolidate all your existing debt make sure you shop around. As with all loans, there are a wide variety of interest rates and charges applied to them from a wide range of companies. The first one you find may not be the cheapest and, depending on how large a loan you need, you could save yourself thousands of pounds by choosing the right one.
Payment Protection
You might also want to consider Payment Protection Insurance on your new loan. PPI as it is known is a way of insuring yourself against the possibility of not being able to pay back the lender due to sickness, injury or redundancy.
It’s a way to remove some of the stress of being tied into the repayments for a long term, but make sure you read all the small print as sometimes PPI may not actually be of any use to you, it will depend on your personal circumstances.
Tags: debt consolidation loans, advertising, ccj, income, consolidate debts, Credit card, payment protection insurance, debt consolidation
