If you have several debts, you may have considered debt consolidation.
Several companies are offering debt consolidation options, but before deciding on a consolidation loan, here are some things to consider.
Consolidating your different debts into one single loan can sometimes be a way to save money and plan your finances better.
Are you paying off several credit card or store card debts and personal loans as well as a mortgage? Debt consolidation means that the consolidation company will take over all your existing debts, and you will pay a single monthly installment to the company, instead of paying off many different debts.
If you have credit or store card debts with high interest rates, consolidating them all into one loan with a lower interest can make a difference.
Some places to look for options are banks or local credit unions, which might offer a reasonable and affordable quote.
If you are in a lot of debt, you have probably received some offers from consolidation companies by mail.
If a company targets you by post, you may have been pre-approved for a deal.
Make sure you compare quotes from a few companies and understand clearly how much you will have to pay every month.
You also need to make sure you can manage to pay the monthly minimum.
There are some risks with consolidation loans.
You need to remember they are not a way to get rid of your existing debts, they are simply a way of concentrating all the debts into one monthly payment.
You still have to be able to make repayments each month, and if you cannot meet the minimum repayment, you might end up in serious financial difficulties.
Not being able to pay back the consolidation loan can also affect your credit rating and cause further problems.