Debt Consolidation Loans

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Struggling With Your Budget ?

When it comes to debt consolidation, it’s important to be aware of the advantages and disadvantages before you take out new credit. Debt consolidation, or credit consolidation, involves taking out new credit to pay off multiple debts or credit card balances.

Combine Your Loans Into One

What are the advantages?

Borrowing money at a low interest rate to pay off loans or credit cards at a higher interest rate can save you money, or help you pay off the debt sooner. Another major advantage is that you can reduce your monthly outgoings AND reduce the number of payments you make every month. Obviously, a lower monthly payment will make it easier for you budget on a month by month basis, and paying into one creditor rather than multiple will make it easier to keep track of everything too. You can also opt for a long-term loan to keep your monthly payments as low as possible, and pay off the loan early (some products may have early repayment penalties).

What are the disadvantages?

While you can reduce your monthly outgoings, taking out a secured loan over a long period could potentially mean that you end up paying more interest overall, despite having lower monthly payments. You are converting your unsecured credit to secured credit, and if you fail to maintain regular payments, it is your property which is at risk. This is something that you should consider when deciding whether a secured loan is for you.

What Happens Once I’ve Applied?
After submitting your loan application our experienced team of underwriters will search the market right away to find the best loan offers for your circumstances. We can usually get an in-principle decision within the hour.

If you need any help or advice please call us on 0800 840 3636 or drop us an email.

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Case study

Mr Smith had four unsecured loans and hire purchase (HP) accounts with a total balance of £14,000, towards which he makes payments of £460 per month. He also has five credit cards with a total balance of £44,000, requiring him to make payments of £1320 per month. His overdraft is also at its limit of £1000, costing £30 a month in overdraft fees.

Mr Smith’s debts totalled £59,000, leaving him in a position where he was paying out £1810 per month and, because of his maxed overdraft, he was not getting back into credit when his pay went in every month.

We arranged a secured loan for £60,000 to pay off his credit and clear his overdraft, as well as leaving him £1,000 for himself. He now has a monthly payment of £474.33 per month and no longer needs to use his overdraft. The loan is over 25 years, and with this lender’s product, there are not any early repayment penalties so he can settle the account or make over payments as and when it suits him.

First Trust Finance Has The Answer