A borrower who has several debts might find it beneficial to get them consolidated. However, it cannot be stated as a universal rule that consolidation will be advantageous every time. You have to evaluate each offer of consolidation on its merit.
It is better to do your homework before taking up any offer of consolidation because it should not prove to be a useless exercise. The motive should be either to save some money in the consolidation process or gain some extra time for repayment, depending upon your individual requirement. After the festive season, people realise that they have several credit card and store card bills pending with them. Since these bills attract very high rate of interest, many people try to get rid of them by consolidating their debts.
Borrowers opt for debt consolidation loans in two situations – to get rid of their credit card bills or to consolidate their large personal loans. Further, debt consolidation loans can be secured or unsecured. Unsecured loans would not solve your purpose if you have large amount of debts to be consolidated.
Debt consolidation can be carried out with the help of unsecured loans if your overall debts are not more than £20,000, because lenders offer only a limited amount of loan in the absence of security. Your application for unsecured debt consolidation loan is quickly processed by the lenders. There is no security involved in this type of loan and hence, no need for valuation of security arises. This saves a lot of your precious time.
Before proceeding with debt consolidation, just take care that you have evaluated the merits and demerits of your move. You should be getting some benefit out of this process. It may be in the form of a lower interest rate, longer repayment period, less monthly outgoing, convenience of dealing with one lender, etc.
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