Debt consolidation is the process of folding or consolidating multiple smaller loans such as unsecured loans, credit cards and store cards into a single loan, often with a lower overall interest rate.
Debt consolidation can offer many benefits and may be a useful option for anyone with multiple unsecured loans and cards as a means of reducing repayments and interest. Rolling smaller debts into one monthly repayment amount also makes for easier management.
Credit cards and store cards are generally renowned for having high interest rates and consolidating these debts into a lower rate loan can certainly see significant savings and financial benefit in some circumstances.
The first step is to evaluate your financial circumstance…
- Are you struggling to make multiple repayments on time? Do you find it hard to keep track of who you are paying when?
Debt consolidation can take away the headache of having multiple lenders to deal with, multiple payments leaving your account and a mountain of paper statements.
- What is the current outstanding total of your unsecured debts including loans, credit cards and store cards?
- What is the interest payment on these account balances?
- Are there any early break or early payment/ termination fees payable on these loans?
Once you have a strong picture of your current financial situation it will be much easier to find a debt consolidation solution suitable to your needs. If you are unsure as to your credit score it is also worth requesting a copy so you can get an understanding of lending criteria and how you fit in within the scope.
As with any financial product it is important to weigh up the pros and cons and any potential drawbacks for your personal situation.
The team at Motorplan can assist in presenting you with multiple options relating to debt consolidation.