Consolidation loans can be good for you, but are they the right way to solve your debt problems in England?
In this article, I’ve explained how consolidation loans work and if they are indeed an option worth trying in the UK.
Let’s dive right in!
What Are Debt Consolidation Loans?
Debt consolidation is the process of combining multiple debts into one. This makes it easier for you to manage your deblots as now you only have one monthly payment to worry about. You can simplify your money management this way as well.
Basically, you transfer your credit from multiple lenders and their monthly payments to a single lender. Consolidation loans also allow you to negotiate lower interest rates with your lenders.
One major advantage of a consolidation loan is that it reduces your number of lenders down to just one. This means that now won’t have to worry about phone calls from multiple lenders at a time. Also, now it’ll be easy to keep up with the single monthly payment that you have to pay.
How to Get A Consolidation Loan
You can get a consolidation loan from a government office or from a company registered in England and authorised and regulated by the relevant authorities.
Keep in mind that you need a good history to get a consolidation loan. People with a bad history probably won’t get their desired loan. Also, if you have a good score, you will also have a better chance of getting a lower monthly payment on your debt.
This will make it easier to manage your budget and will definitely make money management simpler.
Keep in mind that it is important to research the company you are taking a loan from. Different companies registered in England offer different types of loans. Moreover, the monthly payments and the debt amount also varies from company to company.
Compare multiple companies and then make sure you choose a company that is best suited for you. You can contact a money advice service as well beforehand. But make sure to only choose a money advice service which is authorised and regulated by the Financial Conduct Authority.
Moreover, only look for companies with a registered office in England. When it comes to advice, don’t go for mediocre services as good money advice can go a long way for you.
Reviews Of Debt Consolidation Loans In The UK
In the UK, various companies provide consolidation loans. Each of these companies have set their target market to a different type of customer and have rules and regulations according to their targeted customers.
TSB Personal Loan
This is a good option if you wish to consolidate a loan ranging from £1000 to £25,000. The loan term can range from 1-5 years. It is a good option for you to consider as it has good customer reviews.
The requirements for this loan are:
- You must be a UK resident
- You should have a good history
- You must be a minimum of 18 years of age.
This company provides loans ranging from £500 to £15,000. The term allowed is 1 to 5 years to pay back the loan. For this company, there is a minimum and a maximum age as well. The maximum age is 55 years while the minimum is 18.
There is also a minimum income to take a loan from here: £2,800. This company also has positive reviews as they have very friendly and informative representatives.
Post Office Personal Loan
These loans are provided by the Bank of Ireland. They are for loans ranging from £1,000-25,000. The loan term is 1 to 7 years.
There’s also a minimum age of 21 years and a minimum income of £12,000.
Frequently Asked Questions (FAQs)
Do Debt Consolidation Loans Hurt Your Credit Score?
Yes, they do. In fact, they remain on your file for seven years before getting removed. Keep in mind that you can get different types of consolidation loans depending upon your history.
Are Debt Consolidation Programs In the UK Good?
Yes, consolidation programs are actually good in the UK. There are a number of companies with a registered office here that makes your choice easier. Moreover, different companies give out a loan suitable for people in different situations.
For example, TSB personal loan is a company that is suitable for high-income earners with a good history.
On the other hand, Leap Personal loan is a company that gives out longer-lasting loans with low repayment amounts.
You can usually tell by the application form what kind of company it is that you’re dealing with. Make sure to fill the application form carefully and research the company’s services beforehand.
Is It Useful To Get Debt Consolidation?
Yes, it is a good idea to get your debts consolidated but remember, it is not for everybody. Some people cannot even get a consolidation loan because of their history with debts.
Also, it is only profitable if you get a lower rate on your consolidation loan than on your previous debts. Otherwise it’s just you switching lenders for no reason.
What Is A Good Interest Rate For A Debt Consolidation Loan?
The average annual percent rate on a consolidation loan is around 18%. This range has rates ranging from 8% to 28%.
What Is The Most Reputable Debt Consolidation Company?
Remember, consolidation loans usually have very specific conditions. Lenders are very picky when it comes to the people they’re lending cash to. Because of this, one company alone cannot meet the requirements of everyone.
When it comes to reputation, however, Marcus by Goldman Sachs is a reputable company from where you can get a consolidation loan.
Consolidation loans come in handy as they consolidate all your repayments into one monthly repayment.
However, keep in mind that they are not for everybody. Get professional advice as there might be a better solution that is more suitable for you.
If you have any additional questions, feel free to contact me at the email provided.