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Debt Consolidation

Debt Consolidation

Why consolidate debts?
A debt consolidation loan can be taken out to pay debts such as credit cards and store cards, catalogues and personal loans. Taking out a debt consolidation loan means that you will only have to make one monthly payment rather than several monthly payments to cover your debts. This can make it easier for you to manage your finances and, in theory, makes keeping up with your payments simpler. Debt consolidation is not the best solution for everyone. Taking out a debt
consolidation loan could leave you in a worse financial situation than you are currently in. Please
think carefully before taking out a debt consolidation loan.

Things to check first?

Higher interest rates
It is important to remember that if you have debt, or if you have missed payments on your debts,
this will have affected your credit rating. You will usually find that the only way you can borrow more money is at a higher interest rate. If you have to borrow money at a higher interest rate you will pay
more money back over the lifetime (or term) of the loan

Bigger monthly payments and longer loans
You may have to make a large payment to your debt consolidation loan each month, or you could find that you are paying the money back for a long period. If you’re applying for any kind of loan you
should always check how much the payments are each month, and how many payments you will need to make over the lifetime of the loan.

Debt consolidation fees
Some debt consolidation loan companies charge arrangement fees and these will be added to the
money you are borrowing, therefore increasing the amount and possibly the term of your loan. If
you are thinking about taking out a debt consolidation loan it is very important that you consider all of these things, and carefully check the terms and conditions.

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