You only make one monthly payment and this is split between all your debts.
All contact between creditors and yourself is handled by the debt management company.
You pay an amount that you can realistically afford but if your circumstances change this can be adjusted.
You will not receive any late payment fees because all transactions go through the debt management programme, and they may be able to adjust or stop any interest on your debts.
Ideal for people with with debts of less than ?15,000
Reasons why debt consolidation can prove very effective:
Debt consolidation is a process where by you take out a large loan in order to pay off your smaller loans and debts. This may seem like a pointless process, as you are not actually reducing the amount of money that you owe.
However, there are many benefits to debt consolidation, and the main purpose of consolidating your debts is to reduce the number of debts that you have to deal with and reduce the amount of money that you have to pay out each month.
Many people consolidate their debts every year, and this enables them to reduce their outgoings and make financial management easier. In this day and age, where household finances are particularly strained due to higher living costs, rising bills, and soaring food and petrol prices, many more people may decide to consolidate their debts in order to make their budgets stretch further.
The cost of all loans has been rising over recent months as a result of the global credit crunch, but there are still some competitive deals available on consolidation loans, so if you can get a low rate loan you could get a good deal and save a fair amount of money.
You should make sure that you shop around and compare different consolidation loans from a range of providers, as the interest rates, repayment periods, and terms can vary considerably. You should also consider whether you want or are eligible for a secured or an unsecured consolidation loan.
There are many reasons why a consolidation loan could suit your needs, and some of the reasons why you may want to consider a consolidation loan include:
Making it easier to manage your finances: By consolidation your smaller unsecured debts with one consolidation loan you can enjoy easier financial management, as you will have far fewer debts to juggle. It can be a real struggle to keep up with repayments on a wide range of debts such as credit cards, loans, catalogues, store cards etc. and this can increase the chances of missed or late repayments. When you consolidate your debts you will only have one debt repayment to keep on top of, which will make it easier, faster, and less stressful to manage your budget.
Reducing your outgoings: You could find that the repayments on one low rate consolidation loan are far lower than the repayments on your combined existing debts, and this could help your finances to stretch further. By taking out a low rate loan over a longer repayment period you can really keep the monthly repayments down, and this could leave you with far more disposable income each month.
Lowering the chances of missed and late repayments: When you have a range of debts to deal with it can be easy to lose track and make a late repayment or miss out a payment altogether, and this can result in costly fees and charges as well as making a negative impact on your credit file and rating, which can affect your financial future. When you only have one loan and one repayment to manage it is far easier to keep on top of the debt and therefore you are less likely to make a late repayment or miss a repayment.
Another good thing about consolidation loans is that they are available on both a secured and an unsecured basis, and this means that you can find a loan that really suits your needs and circumstances. For example, if you are a homeowner you can opt for either loan type if you have good credit, and if you have bad credit you can usually enjoy a better chance of success with a secured loan. If you are not a homeowner but you have good credit you can get a competitive deal on an unsecured loan.
There is plenty of choice available when it comes to consolidation loans, as these loans are offered by a range of lenders, and you will find plenty of choice when you go online. You will also find that most lenders will do all of the legwork for you – so you simply supply the details of the lenders, accounts, and balances that you want to pay off with the consolidation loan and then the lender will arrange for these to be paid off out of the money that you are borrowing.
So, if your household finances are suffering, as many are these days, and you find that you are really struggling to keep up with your debt repayments it is well worth doing a little research to find out whether you can save money, time, and hassle by taking out a consolidation loan and wrapping all of your smaller debts into one convenient loan.
Have you been blacklisted?
Many people are under the impression that they have been blacklisted because of the way that they have conducted their financial affairs in the past.
However, whilst many people may be made to think that they have been or could be blacklisted, and some firms may even send out literature referring to being blacklisted, there is actually no such thing as a blacklist in the UK, and therefore even if you find it hard to get finance it does not mean that you have been blacklisted.
In actual fact, when someone tells you that you have been blacklisted or that you may be blacklisted what they are probably saying is that due to your situation or your financial history you could find it difficult or impossible to get credit for some time to come.
Your ability to get credit will depend on a number of factors and this includes your credit rating, which is generated from the information that is held on your credit file. If you are described as blacklisted this generally means that your credit is in a bad state that this may result in you being unable to get affordable – or sometimes any – credit.
Being unable to get affordable finance can make life difficult, and for many people this is akin to being blacklisted.
This is why people are urged to ensure that they keep their credit in check and that they do not default on repayments or make regular late or missed payments on debts and bills, as this can result in your credit rating plummeting, and can result in you being unable to get any form of finance, or at least not at an affordable rate of interest.
Of course we all rely on credit to some degree in order to finance the things we need in life, and this is why it is important that you do your best to keep your credit in good shape, otherwise you could find yourself unable to get affordable credit.
There are a number of steps that you can take to keep your credit in check or to improve your credit if it has already been damaged, and this means that you are less likely to struggle in the future when it comes to getting low cost finance.
First of all make sure that you order copies of your credit file on a regular basis, as you will be able to see whether there is any information on the credit file that could damage your credit rating. There is all sorts of information that could affect your credit rating and in some cases it could be through no fault of your own that your credit gets damaged.
For example, there may be mistakes that have been made on your credit file, or outdated information on your file, and this could affect your credit rating. You could find that there have been false applications for finance that have been made in your name, so checking your credit report will enable you to determine whether you have been the victim of attempted identity theft, and could potentially reduce the risk of running into huge problems in the future.
There are three main credit referencing agencies that hold credit files and information, and these are the credit agencies that lenders go through when they are thinking of offering you finance. Therefore the information that is on these credit files is the information that potential lenders will see if and when you apply for credit.
The better the state of your credit the more chance you have of getting the finance that you are after. The three main credit referencing agencies operating in the UK are Experian, Equifax, and Call Credit.
With household finances in the state that they are in at present, due to high living costs and below inflation wage rises, many people may already have been struggling with repayments, and this may have already resulted in damage to their credit file.
By maintaining regular and timely payments on your bills and debts you can maintain a good credit rating, or if you have already damaged your credit you can slowly start to rebuild it. Also, remember that if you make a lot of applications for finance in a short space of time, this can also look bad on your credit file, and will leave black marks on your credit file that will not look good.
The more applications for finance that you make in a short period the more likely you are to be rejected. Therefore if you are rejected for finance you should make sure that you wait around three months before you make another application.
Steps to take when dealing with financial difficulties
In this day and age, with credit conditions, the cost of living, and below inflation pay rises, all taking their toll on consumers finances, most people are only too well aware of how difficult it can be to keep on top of financial commitments.
For those of us that have mortgages, debts, bills, and other financial commitments to cope with the strain can become unbearable, and at some point you may find that you reach a point where you simply cannot cope with your financial obligations any longer, and you need to take steps to sort out your situation.
The steps that you need to take will depend on the cause of the difficulties. For example, you may find that you are struggling with your financial commitments even though you have no debts, simply because of below inflation pay rises as opposed to high food, petrol, and energy prices.
On the other hand you may find that your financial problems stem from the large amount of debt that you are in such as credit cards, loans, store cards, and the like.
If you have little to no debt but you are still struggling to make ends meet each month then you need to take a good, long hard at your budget and see where you can make cutbacks. This could mean cutting back on going out, entertainment, clothes, and any other non essential spending.
If you smoke then this may be the perfect time to kick the habit and save yourself a fortune- with smoking now banned in pubs, clubs, and eateries, there has never been a better time to kick the habit, particularly given the cost of cigarettes these days.
If you look at your budget and there is nowhere that you can make cutbacks, then you may want to consider getting a second job and bringing in some extra income for a while, as this could help to sort out some of your financial problems.
Another option if you are a homeowner could be to consider taking in a lodger – many people are now looking to rent accommodation due to the problems in the housing and mortgage markets, so you could find that this is the perfect opportunity to rent out your extra space and bring in some much needed income.
If you do have unsecured debts that are contributing to your financial problems then there are also a number of steps that you can take to try and ease the situation. The first thing you should do is contact a debt counselling agency or debt management agency, and go through your income and outgoings with them.
Of course, we all struggle with finances from time to time, but if this is becoming a regular problem then it is time to do something about it.
A debt management agency or counsellor will be able to advise if you qualify for a debt management plan, and this is where you pay a set amount to the debt case officer or agency each month and this amount is distributed between the various creditors on a pro rata basis.
You will need to meet certain criteria in terms of how much you earn, how much you owe, and your employment status, but if you do qualify you could see your monthly outgoings slashed considerably.
With this sort of plan you will continue to make the lower repayments until either your situation changes for the better, in which case you may be able to come out of the plan and revert back to your original repayments, or until the debts have been paid off.
However, if you are pretty organised then you may find that you can arrange lower repayments directly by contacting your creditors yourself in writing. Most are sympathetic about financial difficulties, and you will fare much better by contacting them and explaining the situation in order to (more…)
