[buzzsprout episode=’1659796′ player=’true’]Personal Loan for Debt Consolidation helps you to manage and merge everything you owe into one. Read this blog to explore more and know how LoanTube can help.
A debt consolidation loan is a type of personal loan that you take out with the expressed intention of paying all of your other debts off. The type of debts that borrowers normally pay off with a debt consolidation loan is generally unsecured debts like credit card bills, overdrafts, personal loans, debts to bailiffs, tax arrears, payday loans, and overdue bills.
With a debt consolidation loan, you replace all of your existing debt accounts so that you’re left with just one debt account. Is that a good idea for you? What are the pros and cons? LoanTube investigates.
Representative Example: £12,000 over 66 months, 31.9% APR fixed. Monthly payment £358.22 Annual interest rate 28.01% fixed. Interest payable £11,642.52. Total repayable £23,642.52. Representative Example: £12,000 over 66 months, 31.9% APR fixed. Monthly payment £358.22 Annual interest rate 28.01% fixed. Interest payable £11,642.52. Total repayable £23,642.52. Representative Example: Loan Amount: £20950.00, Loan Term: 85 Months, Interest Rate: 23.00% PA Variable. Monthly Repayments: £537.44. Total Amount Repayable: £45,682.15. This example includes a Product Fee of £2,095.00 (10% of the loan amount) and a Lending Fee of £714.00 Representative Example: Loan Amount: £20950.00, Loan Term: 85 Months, Interest Rate: 23.00% PA Variable. Monthly Repayments: £537.44. Total Amount Repayable: £45,682.15. This example includes a Product Fee of £2,095.00 (10% of the loan amount) and a Lending Fee of £714.00 Representative Example: Borrowing £3000 over 36 months with a representative APR of 39.9% (variable),the amount payable would be £134.21 a month,with a total cost of credit of £1831.56 and a total amount payable of £4831.56. Representative Example: Borrowing £3000 over 36 months with a representative APR of 39.9% (variable),the amount payable would be £134.21 a month,with a total cost of credit of £1831.56 and a total amount payable of £4831.56.Maximise your options: Compare and apply for loans below with LoanTube
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Loan Amount
£4000 -
£20000
Norwich Trust
Loan Term
1 -
10 years
4.8/5
Representative APR
31.90%
Minimum Age
21 Years
4.8/5
Norwich Trust
Loan Amount
£4000 -
£20000
Loan Term
1 -
10 years
Representative APR
31.90%
Minimum Age
21 Years
Minimum Income
£2000 per month
Loan Amount
£5000 -
£100000
Evolution Money Loans
Loan Term
1 -
20 years
4.5/5
Representative APR
28.96%
Minimum Age
18 years
4.5/5
Evolution Money Loans
Loan Amount
£5000 -
£100000
Loan Term
1 -
20 years
Representative APR
28.96%
Minimum Age
18 years
Minimum Income
Not mentioned
Loan Amount
£1000 -
£10000
1Plus1 Guarantor Loans
Loan Term
1 -
5 years
4.4/5
Representative APR
39.90%
Minimum Age
18 years
4.4/5
1Plus1 Guarantor Loans
Loan Amount
£1000 -
£10000
Loan Term
1 -
5 years
Representative APR
39.90%
Minimum Age
18 years
Minimum Income
Not mentioned
Why should you take out a personal loan to consolidate your debts?
You could end up paying off your debts for less
Many people have multiple credit card accounts, a bank overdraft, and one or two personal loans. Some of them will have lower interest rates and some of them will have higher interest rates. If you can find a debt consolidation loan whose interest rate means that you will be paying less for the money you’re borrowing, you’ll actually end up spending less – servicing your debts over time than you are now. Get a personal loan for debt consolidation right and you could be quids in at the end!
It simplifies your finances
Having as many different credit accounts opened as people do means that, often, your repayments are taken at different points during the month. It can be confusing enough making sure that there’s enough money left in your account at the right time to meet each repayment.
You have an end date when you will be debt-free
What do credit cards and overdrafts have in common that personal loans and debt consolidation loans don’t? Expiry dates. Credit cards and overdrafts are what is known as “rolling” credit accounts – you have a certain maximum you can spend up to and you’re only charged interest on the amount you’ve taken out. With personal loans and debt consolidation loans, you pay back a fixed sum of money every month for an agreed length of time and, at the end of that time, you have paid off your loan and your account is closed.
While having “rolling” credit like an overdraft or a credit card is handy every now and again, you pay for it in the long run. With a debt consolidation loan, you will truly be debt-free one day and you’ll know exactly when that is because you know the final repayment date before you take a loan out.
Done right, you could make each monthly payment more affordable.
If the interest rate you agree on your debt consolidation loan is low enough and the loan is taken out over long enough, you could not only have an end date when you’ll be out of debt but the repayment you make each month of your debt consolidation loan will be less than the amount you pay now on all the different accounts you have open.
Why should you not take out a debt consolidation loan?
Will you be able to stop using your credit cards?
A debt consolidation loan is only a good idea if you use it as a way of getting out of debt cheaper and faster. You should pay off all your debts on the day your debt consolidation loan comes through and you should never use your credit cards again, ideally. Is that going to be realistic for you? If you don’t think it is, then a debt consolidation loan is not right for you because your debts could grow to be much bigger in the coming years.
Is a smaller monthly repayment always a good thing?
You could be tempted to stretch out your loan for as long as possible to get your monthly repayment down. It’s an understandable temptation but, if you stretch it out over too long a period, you may end up paying more in interest on your debt consolidation loan than if you stick with all your current credit accounts.
LoanTube and debt consolidation loans
LoanTube, one of Britain’s Financial Conduct Authority-licensed comparison website, introduces borrowers to lenders who are happy to help them by providing a debt consolidation loan.
For many lenders, it’s a great sign to them that you’re borrowing money for the right reasons because the right debt consolidation loan means that you can get out of debt quicker and for less. It gives them confidence that you are the type of person they want to work with.
Our job – what LoanTube does so well – is to find the lender who will offer you the best deal so that your monthly repayment is as low as it possibly can be.
Here’s how it works. You fill in our application form – tell us about how much you earn and how much you spend each month. We then take that information (together with the information on your credit report) and then we match you and your personal circumstances against the criteria each lender has given us for the type of person who is their “perfect” borrower. We only propose your loan to those lenders meaning that you’ve got a much higher chance of being accepted and that you’re likely to get the most competitive offers.
This all happens in seconds. Once we have their offers, we’ll then present the best ones to you with all the information you need to make an informed decision – the size of your monthly repayments, the interest rate, other fees, the overall cost of borrowing, and so on. If you like that offer, you can then choose to go ahead by clicking the “I Agree” button once you’ve read the terms and conditions.
With LoanTube, there’s no obligation to take out any loan we find for you. Our service is always free to borrowers. And we do what we do in no time at all so you can get back to the things you need to do.
To start your application, please click here.
