Advantages and disadvantages of consolidating debt
Your Credit Rating is not effected Consolidation simply involves paying off a number of smaller debts with one larger loan.
None of the older debt agreements are being broken as part of this process. Given this your credit rating will not be negatively effected in any way.2.
If you are considering consolidating all of your unpaid debts, then you might want to check out somewhere like for some more information that could make this serious financial decision a bit easier for you.
If you find yourself in a position where you must consider debt consolidation, you need to be aware of the advantages and disadvantages that come with it before you make your decision.
As soon as you take the loan you will owe more than the total value of the debts you have consolidated.
This is because the bank will add interest to the consolidation loan. Mortgage debt is secured against your home If you consolidate debt using a mortgage or secured loan this then becomes secured against your property.
Quick to implement A consolidation loan can generally be arranged swiftly meaning that monthly payments can be reduced fast meaning you get your finances back under control swiftly.1.
You will have to pay back more than you borrow If you take a loan to consolidate your debt you will be charged interest on the new loan.
You will save a significant amount of interest charges The interest you are charged on a consolidation loan is fixed.As such the amount in interest you pay will continue to go up and up.Given this if you use a loan to consolidate debts like your credit cards you will potentially save a significant amount in interest payments.4.Find out which solution is likely to be best for you by using our debt analyser, which you will find in the left and right hand columns of this website.It is free to use and, as well as a detailed report on your best options, you will receive a copy of the e Book ‘IVA & Bankruptcy’ by James Falla. We have debt experts on hand to answer your questions with unbiased, accurate advice that is best for you, not your creditors.