Are you juggling too much debt?

Are you losing track of what you’re paying for? Managing various debts like hire purchases, buy now pay later, personal loans, car repayments, credit card or store card payments can become overwhelming and confusing. It’s easy to feel like you’ve got too many balls in the air.

But there is a solution that can help.

A debt consolidation loan can simplify your finances. Instead of juggling multiple loan payments, you roll them all into one. You then take out a new loan to repay those debts. Because your new debt consolidation loan is at a lower interest rate, paying off your debt becomes cheaper.

One monthly payment to pay them all

By consolidating all your debts into one easy-to-manage loan you’ll only need to make a single regular repayment. No more dealing with multiple payments to different companies. No more late payment fees. No more worsening credit rating. Having to manage only one payment is like having one less thing to worry about.

And because the interest rate is lower, you save money. You can then use that extra cash to pay off your loan even faster.

Some of the financial benefits of a debt consolidation loan

Card fees and interest for late payments: Late payment fees and high interest rates on credit or store cards can add up quickly. Consolidating these debts into one loan can save you from these charges.

Multiple direct debit fees: If you’re making multiple payments, you might have to pay direct debit fees with each one. With debt consolidation, you can get rid of these extra expenses.

Dishonour fees: Banks and lenders may charge dishonour fees for failed payments. Consolidating your debts reduces the chances of these fees piling up.

Default interest: When you miss payments, some lenders may impose default interest rates, which are often higher than regular rates. By consolidating, you can avoid these higher charges.

A debt consolidation loan might not be the best choice for every type of debt

Are the interest rates lower? Debt consolidation loans typically have lower interest rates than credit cards or some personal loans. So, if you have high interest debts, consolidating them into a lower-interest loan can save you money over time. However, if your existing debts already have low interest rates, for example, a student loan or low fixed-rate personal loan, putting them into a consolidation loan may, in fact, cost you money.

What are the repayment terms? Depending on the terms of the debt consolidation loan, you could actually end up extending the repayment period of some of your debt. Even though you have reduced your monthly payments because you are taking longer to pay the debt off, you might be increasing the total amount you pay in interest over the life of the loan. So, consolidating them into a longer-term loan might not make financial sense.

Fees involved in setting up a consolidation loan

Discharge fees: When you pay off your other debts, those debt companies might hit you with an extra fee.

Valuation fees: You might need to get your assets valued to see how much debt you can consolidate.

Solicitor fees: You may need to sign new loan documents, and if a solicitor is required, they’ll charge a fee for that.

Financial discipline

Debt consolidation only works if you have the financial discipline to not run off and crank up new debt on the credit cards or accounts you’ve just paid off. If you continue accumulating debt after taking out a consolidation loan, you might end up in an even worse financial situation.

Is debt consolidation right for you?

This type of loan can be a helpful tool for simplifying payments, reducing interest rates, and making your debt more manageable. However, you need to carefully evaluate your financial situation and the debt types to determine if it’s the right fit for you.

Our friendly team is here to help you work all this out and find a repayment plan that suits you. For example, you might have come to talk to us about taking out a personal loan, but if we see that you’re juggling multiple financial commitments, we might suggest a debt consolidation loan as a more effective alternative.

Putting a budget in place

Before taking out a loan, you need to be able to demonstrate that you have enough income to service a loan on top of all the other outgoings you already have. To do this, you may need to reduce any outgoings that aren’t necessary. We can work with you to help make budgeting easier and help you work out which expenses you may not really need or may be able to cut back on. This will leave more in your pocket so you can pay off your debts faster. We can even align the repayments for your debt consolidation loan with your monthly or fortnightly pay cycle, making it simpler to manage your day-to-day finances. We’re here to help.