There are a number of debt consolidation companies who offer loans designed to consolidate multiple debts into one. This means that you make just one payment a month and have only one creditor to deal with.
The terms, conditions and interest rate of a loan offered by a debt consolidation company will be dependent on factors such as the amount you need to borrow, your credit rating, your financial circumstances (income and outgoings), and whether the new loan is secured or unsecured.
Consolidation caution
We strongly advise against taking out a secured loan with a debt consolidation company, as this will put your home at risk of repossession should you fall behind on payments.
Debt consolidation companies are often keen to advertise their services as a magic wand to make your debts easier to manage. But, if you are struggling to afford the payments on your existing debts, consolidation is unlikely to be the answer you are looking for.
Also, in some cases, a debt consolidation loan can work out more expensive than paying individual debts, either because the interest rates are higher or because the repayment period is longer.
Consolidation counselling
Before you use the services of a debt consolidation company, we recommend that you get professional debt advice. We can provide that through CCCS Debt Remedy, our online service. We can work out the best debt solution for you circumstances.