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People use the phrase "debt consolidation" as if it is some sort of magic pill. In fact you need to be very careful when looking to consolidate your debt especially if you are combining unsecured debt (e.g. credit cards, overdrafts, store cards, personal loans) with differing repayment terms.
You also need to be aware of the risks if you are thinking of using a secured loan to do it.
View some debt consolidation loan options:
The dictionary definition of "consolidation" is:
"to combine (a number of things) into a single more effective or coherent whole"
In the case of loans this would mean:
You may think that if you've had credit problems in the past that you'll never be able to get back in control of your finances. If you are also saddled with various debts as well you may feel very vulnerable. We like to think that a loan to consolidate your debt is part of an overall plan to get control of your finances and family budget. It will not solve issues on its own, but if done properly it could help you so long as you take other steps as well.
There is little point going through the process of debt consolidation unless you stop racking up new debt. So, you also need to cut your expenditure. Here are some ideas of what you could do:
Once you've got to a position where your debt is no longer growing because of over zealous spending and you've managed to pay off some debt (?) then look to reduce the cost of your existing debt.
In principle you can consolidate your debt regardless of your credit position. Whether you should consolidate or not is an important question - one that you may wish to discuss with a qualified financial advisor.
While your aim will be to reduce your monthly outgoings to help your monthly budget there are two key issues to keep in mind when looking at the options:
There are unsecured loans suitable for bad credit situations (e.g. some personal loans, and guarantor loans) as well as secured loans. So make sure you understand what you are embarking on and get proper advice if you need it. To help you narrow down your options use our QuickStart tool.
THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR OTHER LOAN SECURED ON IT. IF YOU ARE THINKING OF CONSOLIDATING EXISTING BORROWING YOU SHOULD BE AWARE THAT YOU MAY BE EXTENDING THE TERMS OF THE DEBT AND INCREASING THE TOTAL AMOUNT YOU REPAY
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