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What is a Debt Consolidation Loan?
Will my debt consolidation loan need to be secured?
If you have a bad credit rating/history, then lenders will generally only offer you a secure loan, this means that your property will be put up as security against the loan and will be repossessed should you be unable to pay it back.
How long will my loan last for?
This is up to you, you can choose how long you wish to have the loan for. Bear in mind that the longer the duration of the loan, the lower each individual monthly payment will be, but due to interest, you will end up paying back more overall. As such it is worth carefully considering your means so that you can get the best balance between the two, allowing you to become debt free as soon as possible.
How many creditors can my loan cover?
There is no formal limit to the number of creditors that a debt consolidation loan can cover, though if you owe debts to a large number of creditors, then your credit rating will likely be poor, and as such you will be offered an increased interest rate, or only a secured loan.
Can I consolidate my debt if I’ve got bad credit??
Yes, creditors will generally still offer loans to consolidate the debts of those with bad credit ratings, but will offer loans with either increased interest rates, or, more likely, only offer secured loans whereby your property must be put up as collateral.
What if my financial circumstances change?
If your financial circumstances change during the course of your loan, then it is worth contacting your creditor to see if you can reduce or increase your loan’s duration to fit with the changes to your situation.
Can I use a credit card
No, indeed rather the opposite; debt consolidation loans are often taken out as a result of inflated credit card debt and while you will still be able to use your credit card after having consolidated all your debt, it is not advisable, since doing so will simply increase what you need to pay back and worsen your credit rating.
Debt is a problem that most of us will find ourselves facing at least once in our lives.
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