Debt Consolidation Benefits

Debt consolidation is a method where a consumer takes out a loan to pay off two or more current debts. The idea is to simply consolidate what is owed on credit cards, bank loans etc by starting a new loan which will pay off all existing debts and create lower monthly repayments.  This is a very popular loan. The Office of Fair Trading estimate that £32 billion of unsecured lending and £8.8 billion of secured personal lending was used for debt consolidation. The benefits of this type of loan are: Lower interest rates–credit cards charge over 20% APR in interest; debt consolidation loans should be considerably lower. Lower monthly payments– This can make the repayment of old debts manageable and budgeting easier also. Dealing with only one lender–you will now have just one company to deal with instead of various statements and demands each month.  The data by the Office of Fair Trading found that most consumers did not take the time to shop around for their loan, they contacted just one lender.  Remember that interest charges, the price of payment protection and early repayment charges vary significantly from lender to lender.