Debt Consolidation happens when you combine all your smaller loans into one, easy-to-manage loan - leaving you with one monthly payment, rather than several repayments that you need to track and manage.
A great advantage of consolidating debt is the opportunity to lower your overall interest rate and monthly repayments, giving you the ability to pay off your debt faster.
The overall interest rate you’re able to get through depends on which type of personal loan you get, so be sure to have a look at our the difference between secured and unsecured loans.
What are the benefits of debt consolidation?
· With a debt consolidation loan you may be able to get a lower interest rate and a new loan term which means your repayments may be smaller and more affordable;
· One loan to manage instead of a couple can make budgeting, and keeping track of your finances, easier;
What are the risks of debt consolidation?
· There may be extra fees and charges, depending on the loan offers, so be sure to compare the debt consolidation offers with different lenders;
· As people, our willpower sometimes isn’t as strong as we would like it to be - having more money to spend each month can mean you don’t put it towards your debt and instead, spend it on other things.
Sounding like debt consolidation is your next step to managing your debt smarter? Money Compare has lender options that are ready to help see you become debt-free faster.