If you’ve got into debt, you’ll know that it can be very stressful. Debts can easily spiral out of control when you can’t keep up with the payments, and it can be easy to end up with no idea of how much you owe to who. If your debts have got into a mess, you could take control again with a debt consolidation loan.
What is a debt consolidation loan?
Debt consolidation is basically debt refinancing. A loan is taken out to pay off other loans. If you’re not savvy about loans, these loans can be a little confusing. If you’re trying to clear debt, make sure you understand this option before deciding on it.
Will a debt consolidation loan damage my credit rating?
No. As long as you can pay on time every month, debt consolidation loans don’t hurt your credit score. Make sure you don’t miss any payments, however, as this will hurt your credit rating. If you get into a real mess, you may need help from tough and knowledgeable criminal defense attorneys.
What if I really can’t afford to repay any of my debts?
If you aren’t able to pay off your debts as they are, borrowing more money is not going to fix the problem for you. Instead of taking on more debt and making the problem worse, reach out to a debt expert or a debt support charity. They can talk you through your different options and help you find a solution to manage the debts that you are able to afford, without getting into more debt.
How much does a debt consolidation loan cost?
The cost depends on many different factors, including how long you want to take the loan out for, set-up costs, the interest rate, and your credit rating.
Look for a loan with a low-interest rate to keep the costs low. This will often mean you have to secure the loan against your home. If you do this, don’t fall behind in your payments, as this can put your home at risk of being repossessed.
Can I consolidate my debts with a credit card?
A 0% APR credit card can be used to consolidate other credit card debts. You will need to pay a fee to transfer the existing balance of any cards you already have onto the new card, but it can save you money in the long-term by taking your debts off the cards with a higher cost. An interest-free introductory rate is perfect, as debts moved onto the card won’t go up during this period.
If you have a card like this, try to pay off as much of the debt as you can while this interest-free period lasts to get the full benefit and save yourself as much money as you can. The more you can pay off interest-free, the better it will be. If you can’t pay off the whole debt in this period, at least pay off as much as you can afford.