There are many options available for
anyone wishing to borrow money, even if you have credit problems. Different
companies and organisations specialise in different types of lending, from
short term payday loans, to consolidation loans for debt and larger loans
secured against assets. The most common way to borrow money is through a
personal loan, where the money may be required for any one of a whole range of
reasons, such as a new car, holiday or item of furniture.
A growing number of people these
days are borrowing money because of personal debt. When debts mount up and it
becomes a struggle to meet all the payments, a common course of action is to
seek a debt consolidation loan. The principle behind consolidating your debts
is that you use the new loan to pay off all your old creditors, leaving you
with just a single new payment to deal with.
Apart from the fact that it is much
easier to deal with only one payment, the other main advantage of a debt
consolidation loan is that the new payment should be lower than the total of
your previous repayments. Care must be taken, however, to ensure that the
payments are not just less because the loan is spread over a much longer
period, otherwise you can end up paying back much more in the long term.
It is also important that the
interest rate on the new loan is actually lower than for the old debts. The
best way to ensure this is to list out all your existing debts and the interest
rates you are paying, then only consolidate those debts which are at a higher
rate than the proposed new loan. Do not be tempted to automatically include
every existing debt you have in the consolidation loan.
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