Consider one large loan instead of several smaller ones
A huge number of individuals and households in the UK are struggling to repay a large number of debts, many of which charge extortionate levels of interest.
However, a number of experts in the financial field have stated that some people could benefit from taking out one larger loan in order to pay off their other financial commitments, as this could make finances more manageable as well as more affordable.
Many people have accrued a range of debts over the years, and this can include store cards and credit cards, both of which typically charge a high level of interest on borrowing. Other financial commitments include unsecured loans, secured loans, catalogues, and hire purchase. However, rather than making payments to a number of lenders and paying interest on a range of debts, consumers in the UK could find themselves much better off if they take out one larger loan and pay off all of the smaller ones.
There are a number of ways in which the consumers could benefit from repaying all their smaller debts by taking out one larger loan, which is known as debt consolidation. Firstly, the consumer will only have to manage one repayment rather than juggling a number of repayments each month, and this can help to make the finances far more manageable and easier to control, reducing the risk of missed and late repayments and the subsequent consequences – a tarnished credit rating and history.
Consumers that take on one larger loan in order to repay their smaller debts will also only have to pay on lot of interest rather than paying interest on a range of often high interest credit. And, because most lenders offer lower interest rates the more you borrow, taking on one larger loan will often mean that you can enjoy a very competitive interest rate, thus keeping down your costs.
7th February 2007
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