As expenses build up, many people take out personal loans, credit and store cards to manage their financial situation. These repayments can be in addition to those made on a home or car loan, and can mean multiple debts spread across a lot of lenders. Over time these debts can become difficult to manage; they are payable at different times and will each carry their own conditions and interest rates. Furthermore any missed payments will accrue fees making staying on top of your finances even harder. This is where debt consolidation can help. When you consolidate your existing debts, you bring them all together. As a result, this creates a single debt with one monthly repayment. For this reason, it can make the payment process simpler and reduce the stress attached to debt.
Debt consolidation loans often have very rigid requirements. This is because borrowers looking for these loans have a lot of risk attached to them. Lenders see a lot of loans and debts and become wary of the borrower’s financial management. On a general level, the lender will want a borrower to do the following:
To be eligible for a loan to consolidate your debt, you must have equity in a property and be able to persuade lenders that you have your finances back under control. How much you can borrow to consolidate your debt will depend on your personal circumstances:
You may wonder how rolling all your existing debts into a single loan repayment can help. After all, you still have the same amount owing. But debt consolidation can, in fact, make a big difference to your financial affairs. It provides the following benefits:
The main risk of debt consolidation is that you won’t change your spending habits and will continue to run up new debts. For example, with credit card balances cleared, there could be a temptation to start spending more than you can afford again. This would quickly grow your debts and lead to a worse financial position than you had previously. Likewise it is important to ensure that the interest rate and any fees and charges you pay on the new loan are lower than those on the debts themselves. You need to be able to afford your repayments – the loan to consolidate is secured against your home, putting this at risk if you fail to make repayments. Find out more Book in a quick call with our customer care team to find out more. With Alexi Neocleous_The information in this article is general in nature. Please seek advice from a licensed professional when making financial decisions._This information in this article is general only and does not take into account your individual circumstances. It should not be relied upon to make any financial decisions. uno can’t make a recommendation until we complete an assessment of your requirements and objectives and your financial position. Interest rates, and other product information included in this article, are subject to change at any time at the complete discretion of each lender. Book a call in with UNO
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