If you have several different debts, such as credit cards, loans, overdrafts etc, that you are struggling to repay each month then debt consolidation is a debt solution which could make your life easier.
Debt Consolidation is the process of taking your unsecured debts and consolidating them into one monthly payment by obtaining a loan, leaving you with only one monthly bill to pay. For example if you have credit cards, loans and overdrafts etc, instead of paying of 3 or 4 bills each month you would pay them off with the loan and just make the one loan payment each month. You can use a personal unsecured loan or a secured loan to pay of the debts in full. This method of debt consolidation means that you only concentrate on paying back the one loan payment per month, leaving your payments much more manageable.
Lets say you have debts consisting of credit cards, loans and an overdraft. The total of these debts comes to approx €10,000. You have many different monthly debt repayments of varying amounts, which is hard to manage and you feel like you are getting nowhere with paying off the debt. You are also struggling with meeting the monthly repayments because of the varied levels of interest..
You manage to obtain an unsecured loan of €10,000 with a low fixed interest rate. You use this loan to pay off all of your debts. The interest rate on the loan is much lower than all of the combined interest on your multiple debts so this allows more money to go towards the actual repayment of the debt. You have a set period for the term of the loan and your monthly repayment is much lower and more manageable than your monthly debt repayments before the loan.
It can be easier to manage
You will have just 1 affordable monthly payment
You will know exactly when you will be debt free
Reduce high interest rates on your credit cards, store cards, overdrafts or loans.
You may be subject to fees for arranging the loan
If your credit rating is poor, you might not get a good interest rate on your loan
If you obtain a secured loan to pay your debts off, and you miss payments on the loan, your home could be at risk.
If you don't get a fixed rate on your loan, the interest could vary or increase during the loan term.
Don't be fooled into thinking that you have cleared your debts. You have just shifted it to another form.
Knowing whether or not to consolidate debt is not a decision that should be entered into lightly. It might be right for your circumstances, but in some cases a different debt solution might be better. There are certain criteria you will need to meet in order to qualify for Debt Consolidation. It will also depend on the amount of creditors and outgoing bills you have as well as your overall debt amount. Some of the criteria that would qualify you for debt consolidation are as follows.
nb. *The suitability of consolidation also depends on the level of your debts. Sometimes there are better options for you such as debt management or a DSA (Debt Settlement Arrangement)..
This depends on exactly how much money you are paying and how long you want to repay the loan borrowed. It also depends on what interest rate you agree on your loan and whether or not it is fixed or variable rate. Reductions in monthly payments can be highly reduced with the right consolidation loan.
There are a variety of factors which dictate how much you can borrow on a loan. Whilst your income and, for secured loans, the equity available in your property are key, the main one is that you can afford to make the monthly repayments back into the loan. The lender must be confident that you can repay the debt.
This is usually up to you and will depend on how much you feel you can afford to pay each month. For example, you might want lower repayments spread out over a longer period of time if you are trying to get on top of your finances each month. Most loans are usually available for anything from 3 years up to 25 years, though some loans can be spread over a longer period of time, depending on your circumstances.
Certainly. Consolidating your existing debt allows you to free up money for other things. You can borow extra for other things, such as a new car or home improvements. The choice is yours. Just remember though, the loan is a debt and you will need to keep up repayments so do not over-borrow.
If you have illness or lose your job and cannot keep up repayments on your loan, this can cause some problems, the severity of which depends on whether your loan is secured or unsecured. You must consider this if you are applying for a loan. Some companies will arrange accident, sickness and unemployment cover if you want the added peace of mind this brings. Life assurance is also advisable. We would strongly advise that you consider very carefully before taking cover as it can be very costly to do so as some companies charge too much for this.
The answer to this question depends on the type of loan you have taken out and how much equity is in your home. If it is an unsecured loan, then yes, you may sell your home. If it is a secured loan against your home, then, providing you have equity in your home, you can use the proceeds of the sale to pay the outstanding balance of the loan. That is providing you are not subject to hefty early settlement charges, detailed in the loan agreement. Another option for a secured loan is to transfer the loan to the new property. This option may carry a fee and not all lenders will allow this.
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My experience with McCambridge Duffy was excellent. Not knowing what to expect when I applied for an IVA, I was surprised how easy they made it for me, always keeping in contact with me and someone was always there when I had questions. 10/10! A very helpful and friendly service.Gary from TrustPilot
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The only regret I have is that I didn't do this sooner. I am so glad I chose them to help me get my life back. I never once felt like anyone was judging me and everyone put me completely at ease. I would recommend them to anyone who is worried about their debt. I can now sleep at night and my stress levels have gone right down.M. from TrustPilot
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