Consolidation loans

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Mortgage lending by the major UK banks dipped in June compared with the previous month, figures show. The number of mortgages approved for house purchases in the month fell to 34,813, the British Bankers' Association (BBA) said.

What is Debt Consolidation? Is a debt consolidation loan the right option for me? An unsecured debt consolidation loan combines your existing debts. This should make your debts easier to manage. As only one monthly payment is required there is a reduced likelyhood of missing payments which can affect your credit score. This assumes that the new debt consolidation loan will be sufficient to repay all other unsecured debts. Any payments to debts that are not repaid by the new consolidation loan will still need to be serviced by the customer. Typically a consolidation loan will reduce your monthly repayments meaning that your have more money to spend on the things that you enjoy. This can often be all that is needed to put an end to the stress-inducing demands made by nagging creditors. It is worth noting that using an unsecured loan to consolidate debts will usually lead to an increase in the total amount of debt to be repaid. APR on a debt consolidation loan is 16.9% typical. Can I apply for Debt Consolidation? An unsecured Debt Consolidation loan can be a highly effective way to sort out your debts, but it's not easy to get. Typically loans are between £1000 and £5000, typically, lenders consider these amounts less risky than larger amounts where the loan is not secured against property or other assets. Anything over these amounts are rarely lent unless you have a clear credit history, and unfortunately applying for consolidation loans can be detrimental to this score. If you have a less then perfect credit score then it can be very difficult to get a loan, even for between these amounts. At Debt Angel we always call you before checking your credit for a loan, we will let you know through our own analysis whether you are suited to a loan, or any other products we offer.

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Consolidation Debt Loan: How It Works The first thing to say is that taking out a consolidation debt loan is not the best solution for every situation. We believe a lot of people turn to debt consolidation through unsecured loans simply because it is one of the few debt solutions that they are aware of, so they think of it automatically without necessarily considering all the other options. There are certainly some circumstances when a debt consolidation loan will help you, but in some situations it could actually make your problems worse. Generally speaking, consolidation debt loans are unlikely to be the best solution for very significant amounts of debt. If your debts are well into the thousands, you might be better off looking at Debt Management or (for UK residents only) an IVA. For that reason it is important to have an understanding of how consolidation of debt using an unsecured loan works before you enter into any agreements. Take some time to read this page, which will help you find out if you are in a situation where a loan might help, or whether you would be better off talking to a Debt Management Company about the alternatives. You will also find out about a few things that you need to consider if you do take out a loan, to make sure that you are using it to the best advantage. Debt consolidation is about taking out a new unsecured debt loan and using it to pay off all your old debts. There are generally two great attractions to this idea. Firstly is the fact that instead of lots of individual debts to keep track of, you only have one monthly payment to worry about. This makes things much simpler and can genuinely be a benefit in terms of helping you to keep on top of things and not miss any payments by accident. The other main benefit is that your new single monthly payment will normally be less than the sum of all the monthly payments for your existing debts. Consolidation Debt Loan: The Advantages •You only have a single monthly payment to worry about. •It should be easier to keep track of your debts and less likely that you will miss payments and fall behind. •You can use a consolidation debt loan to pay off your Priority Debts (mortgage, etc), which you cannot do with debt management plans, debt settlement, IVAs, etc. •You can swap high interest rate debts for a loan at a lower interest rate. •Your monthly payments should be less than the combination of your current debts. •You have a definite end date for when you will become debt free. Consolidation Debt Loan: Possible Consequences Depending on the lender you deal with, a reduced monthly payment does not always mean that you are better off in the long term. Some lenders talk people into ridiculously long repayment periods, lasting far longer than your original debts. What this means is that you could end up paying slightly less each month, but keep on paying for much longer, with the result that you end up paying the loan company much more that you would have paid if you had had just carried on as before. For example, if your old debts are costing you £100 per month in total, but you expect to pay them off in two years, the total cost to you is £2,400 altogether. If you were to take out an unsecured debt loan and reduce your payments to an attractive £75 per month, then that looks like a good deal. But if the terms of that new loan require you to keep paying for four years, then you will have paid back £3,600 by the time you are finished. So you gain a bit of breathing space on the monthly figure but end up paying £1,200 more than you would have if you had not taken out the loan. So if you do decide that a debt consolidation loan would help you, take care to only deal with reputable lenders. Have a look at the following brief guide, which gives some indication of when a debt consolidation loan may be most appropriate. Remember that a loan is not the only way to consolidate your debts, and you may decide your circumstances are better suited to a Debt Management Plan (DMP). If you are in a very serious situation, and might struggle to keep up with payments on a loan or DMP, you may need to look at an IVA (for UK residents). . When An Unsecured Debt Loan May Be Useful •When you are paying high interest rates on current debts •At times of low interest rates because the rates on a new loan should be better than the rates on your existing debts •When you have checked properly what you can afford and you are positive you can meet the new loan repayments for the full term of the debt consolidation loan When An Unsecured Debt Loan May Not Be The Best Solution •If you have taken out debt consolidation loans before and it has not worked for you •If you plan to use it to pay off a previous debt consolidation loan •If you want to pay off credit cards so that you can carry on using them again When Considering Using Unsecured Loans To Consolidate Debt: •Only apply to well established and reputable lenders •Apply to at least two or three companies so that you can compare interest rates and offers •Consider whether you have enough surplus income each month to make the new payments (you might even want to prepare a Personal Financial Statement to identify your Surplus Income) •If you think your situation might get worse, or you are in doubt about whether you will keep up with the payments, consider a more flexible Debt Management Plan instead. •If you are using the debt consolidation loan to pay off credit cards, make sure you cut the cards up and cancel them straight away. DO NOT continue to use them. Debt consolidation loans can be a useful thing, provided you use them properly. If some of your existing debts are at a particularly high rate of interest, and interest rates have since dropped, then you may be able to get a loan at a lower rate of interest than your old debts and save yourself some money. The best way to check this is to list out all your existing debts with the rates of interest that you are paying on them. Put them in order starting with the highest interest rate at the top. Take the interest rate for the consolidation loan you want to take out and draw a line across your list at that level. If you only use a loan to consolidate the debts above that line, you will be better off.

Credit card news...

Credit cards can be a great way to make the most of your money, but it is easy to get caught out by the nitty gritty of the terms and conditions. If you miss a payment, or make an error, lenders will often hit you hard with penalties and charges. So why do so many of us refuse to read the small print? And how can we avoid getting caught out? To try to find out just why so many of us have a blind spot for the small print, BBC Two's Money Watch programme brought in financial expert Clare Francis, editor of moneysupermarket.com. She designed a brand new fictional credit card full of sneaky catches, all based on the small print of real credit card deals. The Money Watch Platinum card had a fantastically low interest rate and some true-to-life incentives, such as 0% deals and a cashback offer. The team had a large advertising display made, and they printed up leaflets detailing all the tempting offers. Then they launched the card on the unsuspecting public in a busy shopping centre. Clare Francis was confident that not many people would spot the hidden pitfalls, even though they were clearly shown in the advertising. "We've put all the small print on the bottom of the advertising display stand and we've got a summary box on the back of the leaflet. So the information is there for people to read but most people probably won't even look at it," she said. So what are those hidden catches? Firstly, there is the annual percentage interest rate or APR. The Money Watch card has a very competitive 11.9% APR. But it is a Typical APR - meaning that not everyone who is accepted for the card will actually get that rate.

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