Consolidation loans can either be unsecured or secured
When you take out a loan to pay off rest of your debts is known as Consolidation Loan
Consolidation Loan makes it easier for you as you do not have to make several payments to different creditors each month. You make one payment for the consolidation loan.
If you are in arrears, your credit rating may have been affected and it would be difficult to get a loan at a reasonable rate of interest. Make sure you check:
• Interest rates charged
• Monthly rates charged
• Total amount you will repay
• Length of time it will take to clear the loan
• Fees for missed payments
• Redemption penalties and other tie ins
If you extend the loan over a longer term than your original debts, you will pay more interest increasing your original amount of debt.
If you are a homeowner, you may be able to get a better secured loan against your home. However, the creditor will file for a second charge against your property. Please remember if you are going to have secured loan or second mortgage, you are at a risk of losing your home if you are not able to keep up with your repayments.
You must carefully consider your present and future financial situation before applying for loan. Work out how much you can reasonably afford to pay each month without getting into further financial difficulties.
Prepare a budget (click here to prepare financial statement) and ensure you stick to it until you have repaid the consolidation loan in full and not end up in further financial difficulty.
Finally consider very careful if you are going to consolidate your personal unsecured loans or credit cards by taking out a secured loan. You will secure these debts against your house and if you fall behind with the payments, your home will be at risk of repossession.
If you are in arrears, your credit rating may have been affected and it would be difficult to get a loan at a reasonable rate of interest. Make sure you check:
• Interest rates charged
• Monthly rates charged
• Total amount you will repay
• Length of time it will take to clear the loan
• Fees for missed payments
• Redemption penalties and other tie ins
If you extend the loan over a longer term than your original debts, you will pay more interest increasing your original amount of debt.
If you are a homeowner, you may be able to get a better secured loan against your home. However, the creditor will file for a second charge against your property. Please remember if you are going to have secured loan or second mortgage, you are at a risk of losing your home if you are not able to keep up with your repayments.
You must carefully consider your present and future financial situation before applying for loan. Work out how much you can reasonably afford to pay each month without getting into further financial difficulties.
Prepare a budget (click here to prepare financial statement) and ensure you stick to it until you have repaid the consolidation loan in full and not end up in further financial difficulty.
Finally consider very careful if you are going to consolidate your personal unsecured loans or credit cards by taking out a secured loan. You will secure these debts against your house and if you fall behind with the payments, your home will be at risk of repossession.
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