| If you watch daytime TV for an afternoon you | | | | an 'unsecured' credit agreement such as a |
| can't fail to notice the huge number of adverts | | | | personal loan or credit card. |
| for loans that crop up between programmes. | | | | Adding the debt to your mortgage |
| These ads claim that they can solve all your | | | | While for a small niche group of people in very |
| money problems by consolidating all your debts | | | | specific circumstances secured loans may be the |
| into “one simple monthly payment”, which | | | | right option, in most cases they are not and debt |
| is lower than the payments you are currently | | | | problems can be tackled in other ways. In some |
| making. The adverts also boast that when you | | | | circumstances, the debt could simply be added on |
| consolidate your loans like this, you also get the | | | | to your mortgage by remortgaging and taking a |
| chance to borrow more at the same time to | | | | further advance. The interest would be payable at |
| spend on whatever you like; a new kitchen, car | | | | a much lower rate and you may be able to pay it |
| or holiday for example. This message is invariably | | | | off more quickly. |
| accompanied by a cheesy visual of a chuffed | | | | Taking out an unsecured loan |
| customer revving the shiny new motor he’s | | | | If, after assessing your financial situation, you |
| just purchased with his miracle loan. | | | | decide that some kind of loan is the best option |
| But is it really that easy. And is it ever a good | | | | for you, there are a number of alternatives |
| idea? | | | | available. As well as banks and building societies, |
| Putting it all together | | | | there are a raft of loan companies on the |
| If you consolidate a loan with one of these | | | | market, some of which operate solely online to |
| companies you may find that you are paying a | | | | keep costs down to a minimum. |
| lower interest rate than you were on your credit | | | | When choosing a loan, it's not just a good interest |
| cards. But there are good reasons for this. | | | | rate or APR that you should look for; early |
| The repayment of the loan is spread out over a | | | | repayment penalties and costs for payment |
| much longer period, meaning the total amount of | | | | protection insurance (PPI) also need to be taken |
| interest you pay is usually either equal to or more | | | | into account before taking the plunge. |
| than you would have paid anyway, despite the | | | | Seek help |
| lower rate. | | | | Anyone who is in debt crisis should seek help |
| The other, probably more important point is that | | | | from one of the free debt counselling charity |
| most consolidators offer their services only to UK | | | | services like the Consumer Credit Counselling |
| home owners. This means that the loan is | | | | Service, National Debtline or the Citizens Advice |
| 'secured' against your home and if you cannot | | | | Bureau. |
| pay it back your property may be in danger of | | | | Christian is an author of several articles pertaining |
| being repossessed. Because the lender can claim | | | | to Personal Loans. He is known for his expertise |
| against your property in the event of you | | | | on the subject and on other Business and Finance |
| defaulting, they can offer cheaper rates than on | | | | related articles. |