Having debts in your name simply means that your monthly outgoings are higher, resulting in stress on your limited finances. In the UK, larger numbers of people have put their finances under stress because of the old loans. For them, debt consolidation loans can be an apt solution, but these loans should be carefully taken, or you may fall into another debt-trap.
Main motive behind these loans is to merge all your unsecured debts under singly monthly payments, which is usually of lower amount. You can pay off the old loans through the new loan, o r the payment can be made by the new lender as well. Immediately, you get rid of old payments of higher interest rates, and replace them by the new loan of lower interest rate. You can save money on interest payments, besides getting rid of your various creditors.
Debt consolidation loans are made to the debtors in secured or unsecured options. The secured loans can give you greater amounts in the range of £5000 to £75000, depending on the balance payments on old loans, and depending on value of the property, against which you borrow the money. Rate of interest is kept lower on such a loan. You can repay the loan in 5 to 30 years. The unsecured loan is useful for smaller amounts ranging from £5000 to £25000, for repayment duration of 5 to 15 years. However, interest rate goes little higher. Still, because of your improved credit rating, you can find these loans at lower rate than the rate on existing loans.
These loans can also be found despite your bad credit history of late payments, CCJs, arrears and defaults. But you should be prepared for a bit higher interest payments. Purpose of such a loan could be to improve your rating in the coming days, besides reducing the monthly outgoings. Compare different offers of debt consolidation loans UK, for finding out a suitable deal for your circumstances. Repay the new loan on time to avoid another burden.