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In a Twist? Consolidate Yourself a Loan

Feb 10, 2008
Debt consolidation loans have become very popular over the last number of years. Many people have found themselves in financial difficulties in recent years with high interest credit cards and store cards. The interest on these can leave it very difficult for individuals to meet their monthly payments.

Things can start to get out of control as people find they cannot meet even the minimum payments on their cards and so they face extra penalties. The reason a lot of people choose to consolidate their debt is because they can use the loan to pay off all their existing bills and replace it with one smaller payment.

This gives people better control over their finances and they can go form having a lot of high interest bills to pay to having one smaller bill to pay every month, and because you can spread you debt consolidation loan over 25 years means the monthly payment can be half or even quarter what you use to pay.

It must be noted however that the longer you spread the payments over the more you will end up paying in the long term. This is the reason debt consolidation loans have received some bad press, but you have to remember that these loans can save you from financial ruin and in some cases bankruptcy.

If people use them properly then they can be a very helpful financial product and help to repair bad credit. It is easier for people to budget every month when they have only one fixed payment instead of having six or seven different payments. Also if you pay the amount on time every month this will help give you a better credit rating.

One important thing to remember about debt consolidation loans is that you should treat them as a second chance. It can be easy to find yourself in debt and suddenly you find it hard to make all your payments. So by consolidating your debt you give your finances a second chance so it's important not to get back in financial trouble again because you might not have enough equity left in your properties to get another loan. So you will be in financial difficulty and have no way out. It is very important not to fall into this trap.

A debt consolidation loan is usually a secured loan where the lender will use the equity in your property as security which usually means you will get a lower APR than an unsecured loan. The main reason this type of borrowing has become so popular over the last few years is that house prices have risen so sharply throughout the UK. A lot of people in the UK have taken advantage of this fact and taken out a loan to consolidate all their bills.

If you have bad credit you can still apply for this type of loan as the value of you property will be taken into account. It will probably mean you will pay a higher interest rate because of your bad credit history but at least you will be able to begin repairing this with your loan.

When considering a debt consolidation loan one should always go to a company that has a large variety of lenders. If you go to one individual lender or bank they can only offer a product from their limited selection. However, if you go to a site than gets your full details and then compares the whole of the market then you will get the best deals. So not only will you drastically reduce your monthly bills but you will also be getting a great deal.

One final point to remember is to always give your proper details when filling out an application form as these speeds up the loan process and also means that the lender or broker can give you an accurate quote. If any of the information is incorrect it can alter the offer that the lending company give you later in the loan process.
About the Author
Financial expert Shaun Parker has many years of experience of advising people on money matters. To find out more on debt consolidation loans visit http://www.ukwebloans.co.uk
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