Reduce your monthly repayments
Personal and homeowner loans
A debt consolidation loan is exactly what it says on the tin: a loan designed to help you get on top of any outstanding credit you have, by moving all your debt into one place. That means one monthly repayment, one interest rate, and one lender.
We get it might seem a little overwhelming, but it really is quite straightforward. With a debt consolidation loan you’ll:
Take out a loan that will cover all your outstanding credit
Use the loan to pay off your creditors in full
Make single monthly repayments until your loan’s complete.
Whether you opt for a secured or unsecured debt consolidation loan will depend on two things:
If you own your own home or not, and
How much money you need to borrow
A secured loan is one that’s ‘secured’ to the equity you have in your property, and for this reason is only available to homeowners. As with any type of credit, sticking to your repayments is essential but with a secured loan, your home could be on the line if you don’t.
If you’re not lucky enough to own your property, you need to borrow less money, or you simply don’t like the idea of putting your home at risk, an unsecured debt consolidation loan could be an option.
As the name suggests, this type of loan isn’t secured to anything and eligibility is based purely on you and your finances. For this reason, unsecured loans are accessible to more people, but it means a patchy credit history could hinder your chances of being accepted (although not necessarily with us).
The answer to this one depends on which type of loan you decide on:
With a secured debt consolidation loan you could borrow between $5,000,000 and $25,000,000 over 3 to 25 years.
With an unsecured debt consolidation loan you could borrow as much as $5,000,000 for up to five years.
In a nutshell, yes. That’s not to say there aren’t exceptions, but some lenders and credit brokers, including us, specialise in helping people with a less than perfect history of managing credit.
There are four ways a debt consolidation loan could and should help you:
Streamlined monthly payments - instead of worrying about keeping up with multiple monthly repayment amounts (and all the stress it brings!), a debt consolidation loan narrows that down to one set sum.
One interest rate - part and parcel of the one monthly repayment, is one interest rate. So no more confusion over how much you’re paying in interest and to who, it’s all under one umbrella.
One lender to deal with - once you’ve used your debt consolidation loan to pay off your creditors, you won’t be receiving letters/phone calls/emails from several lenders any more, which we understand can feel very overwhelming. Instead, you’ll have one point of contact.
Become debt-free quicker - taking on a debt consolidation loan could help you clear your credit sooner if you end up paying less interest and are able to put that extra money towards clearing your debt.
If you’re still not sure if a debt consolidation loan’s right for you, here are some pros and cons to help you reach your decision.
Often carry lower interest rates than unsecured loans
Generally easier to obtain because they carry less risk for lenders
Can borrow more money and for longer than unsecured loans
More likely to be accepted with a poor credit record
You could be risking your home if you fall behind on repayments
Taking out a loan over a longer period means you’ll be paying interest for longer, which could result in paying more overall than with individual debts
One interest rate is likely to be less than several combined
You won’t be putting your property on the line
Limited to how much you can borrow versus a secured loan
Harder to obtain with a patchy credit record
Shorter repayment durations available
The reality is you can use any sort of loan to consolidate your debts. So, if a standard unsecured loan isn’t an option for you for whatever reason, you might decide using a guarantor to access a loan and streamline your debts is the way forward.
Here at GMM financing loan, some of our lenders offer guarantor loans and non-guarantor loans, so this might be something to consider if you feel like you’re running out of options.
Yes, as long as you take out your loan with a reputable lender and keep up to date with your repayments, you shouldn’t run into any problems with a debt consolidation loan and they’re as safe as any other form of borrowing.
East Devon District Council, Blackdown House, Border Road, Heathpark Industrial Estate, Honiton, EX14 1EJ