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Representative example: £5,000 over 5 years at 16.9% APR representative. Rate of interest 16.9% fixed. Monthly repayment £120.85. Total charge for credit £2,251.00. Total amount repayable £7,251.00
Representative Example: Borrow £700 @ 12 months at £111.27 per month, total repayment of £1335.24, Interest £635.24, Interest rate 140% p.a.
Representative 277.5% APR (Variable). APR rates range from 45.3% APR. to 1575% Max APR. Your APR rate will be based on your circumstances.
Using Consolidation Loans For Multiple Debts
Debt consolidation is the process of merging all your credit into a single, lower monthly repayment. It can be done with a help of consolidation loans. By combining all your unsecured debts, you are reducing your liabilities and turning it into a new account. You may be able to acquire it from a bank or by using your home equity.
Common Debt Consolidation Methods
One of the common ways to address multiple debts is by the use of your home equity; however, it can be risky because you are securing the debt with your home. If you can’t afford the repayments, your home is subject to foreclosure. But that wouldn’t happen if you’re responsible with your newly created account.
Meanwhile, if you work with a debt consolidation company, your loans may not be combined with a loan. This means that your debts are still separated but your repayment is consolidated. It works by sending one monthly payment to the company, then that company will divide your repayments and send it to the lenders or creditors you’re associated with.
Consolidation loans, on the other hand, are loans created for the purpose of combining all your accounts. The loan usually carries an interest that is lower than your current debts. The money is solely used to settle all your credits and in return, you will repay the lender on a monthly basis.
Once you’ve consolidated your debts, you may feel like your burden has become lighter. However, you should remember that you’re still paying the same amount of loans as before. The difference is, rather than working with multiple accounts, you’re just paying for one. Therefore, it is both beneficial and detrimental.
Beneficial because your liabilities with different lenders are reduced and your monthly repayment and interest rate is lower than before. However, decreasing your monthly repayment often means lengthening the repayment period. As a result, you’re dealing with the loan for a longer time and no matter how small or big the amount is, this means that you still need to bother saving money intended for the loan settlement. Plus, the longer the repayment of consolidation loans, the bigger the interest rate is charged on it.
Can You Take Debt Consolidation Loans Even If You Have Bad Credit?
Bad credit borrowers often have a hard time to obtain loans. This is because the lender sees them as a threat to their company. Normally, you acquire a low credit score when you have a record of defaults, foreclosure, bankruptcy, CCJS, arrears, late payments, and the like. Fortunately, most loan providers have become lenient with their requirements, often skipping credit check. That being said, there are companies who are willing to entertain their application.
So even with the poor credit rating, you can settle all your accounts using one type of loan – debt consolidation loans. It works almost the same as other loans; however, it is intended to reply you’re your debts and not be used on anything else. The monthly payment is cheaper but the interest rates are higher. Some companies even charge an upfront fee which is about 10% of the loan amount. Therefore, before sending an application, be sure to improve your credit rating, or at least check your credit history. Ensure that your credit report contains the right information and in case of inaccuracies, report it immediately. Once you’ve resolved your multiple account-dilemmas, be sure to settle smaller debts in the future and refrain from borrowing again.
What To Watch Out For
Like other industries, debt consolidation programs are full of scammers and other people who take advantage of other individuals for their own interest. There are companies who are willing to push you into getting a loan with them without you, realizing, that you can settle the debts on your own. Meanwhile, there are companies who are pocketing the money instead of sending it to the creditors, leaving you with more problems, such as a damaged credit. Therefore, before you acquire consolidation loans, it’s important that you evaluate the company and their products first to avoid ending in a worse situation.
Many people who wanted to reduce their debts end up with a debt again, after a short time. But what’s worse is having a new debt on top of the debts they already have. This happens when a newly available credit is used again. So if you want to get consolidation loans and resolve the multiple accounts you have, be sure to close all your credits and focus on repaying it alone, rather opening a new account.
Debt consolidation loans are not designed to make the borrower’s problem worse, but basically, it depends on the person using it. So before you talk to the lender, find out if you are capable of handling it first. Meanwhile, if you think that this will not work on your behalf, there are other alternatives you can use. These debt consolidation alternatives will allow you to repay your accounts sooner than you can think of and reduce the interest in the process.
- Paying It On Your Own
It is a little challenging but creating your own plan to pay it off is far better than using another program. To make it easier, you can settle one account at a time or negotiate with the lender. Some loan providers are willing to waive fees, lower interests, or alter the repayment period just so they can have their money back.
- Work With A Consumer Credit Counseling Service
Credit counseling agencies can help you negotiate with the creditors using a debt repayment plan. This may include reducing the interest rate or the repayment itself. All you have to do is make one monthly payment for their service and the counseling agency will settle the debt for you.
- Settling Your Debts
Known as a negotiating strategy, debt settlement is done by paying your lenders a fraction of the outstanding debt to suffice the loan. However, it is only a viable alternative if your accounts are already in the collections. You can work with a company to achieve this or do this on your own.
5 most recent personal loan reviews
Great team at credit star. Helped me out a few times with no bother at all! The new expense calculator is a great way to speed up the application too! A quick phone call to confirm some bank details and the money was in my guarantors bank in hours! Brilliant service, thanks you stars!
Review posted by Ian Yeates, Pocklington
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Loans Hub are seriously good at what they do. I knew I would struggle to get a loan as have poor credit history although I work full time. My sister was happy to be my guarantor as she knows I would never leave her to pick up my debt.. that's the key to loans hub loans and why they work so well. From start to finish the process was professional and easy. I never leave feedback for anything however I felt so strongly that I should share my positive experience.... just go for it, you won't regret it!!
Review posted by Emma Maguire, Darlington
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Money made simple - M&S complete all the necessary background checks, even though it may seem a lot, it is not. Its made simple by an efficient team of advisers. Money is drawn down by the underwriting team within an acceptable time frame of 2 working days. I spoke with a guy called Michael over the telephone and he was able to discuss my top up loan and within a matter of minutes the loan application was completed. Great service all round.
Review posted by Connor Brewer, Cheltenham
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