Today loans have become a very popular choice for all those who are need of financial support. It enables the person to stand on his feet and to fulfil his needs. However, today it is not uncommon to see a new problem arising that is increase in the number of loans. People taking multiple credits from different financial institutions are facing difficulties remembering when exactly the payments are due for each advance. Moreover it becomes tough for them to do budgeting as they have hard time calculating how much they owe to each creditor along with the interest. When such situation arises, the only way out of it is to apply for Debt Consolidation. By doing this a person can remove all the tensions from his mind.
Debt consolidation means merging or consolidating all your loans or debts together into a one unit. Thus, a single advance is taken to pay off all the small dues of the debtor. By availing a fresh loan, the borrower is actually paying a lower interest rate and is getting rid of all the existing debts. Also, his monthly payment to multiple creditors is reduced to only one. And so in this way higher interest rate of many loans are eliminated with the help of consolidation process.
Companies offering these loans sanction any amount from £250 to £250,000. This loan can be acquired by the borrower to pay off his dues. The repayment period ranges from 6 months to 25 years. Therefore, a person gets ample lot of time to pay back the debt.
Debt Consolidation can be of two kinds- Secured and Unsecured. In secured type, to avail the loan, debtor has to place collateral. As the credit is backed up by a security, the rate of interest is low. Unsecured type id the one in which no security is pledged to acquire the loan. The interest rate charged by the lender is high as he has no assurance as debtor has not placed any property as collateral.
There are a few eligibility criteria for the debtors. Firstly, the age of the candidate should be above 18 years. He/ She should have a permanent citizenship of United Kingdom. The person should be currently working with any reputed firm and earning a regular monthly income. Finally, he/ she should have an active bank account.
Thus, Debt Consolidation is a great way to bring multiple loans to one manageable unit. It also helps reducing stress regarding how the bills are going to be paid. It also results in lowering the interest rate by pooling in all the high interest rate debts.