As the cost of living crisis continues and with inflation currently sitting at 10.7%, the financial pressure facing many households in the UK feels like it’s increasing all the time, and that’s before you consider the added pressure of buying expensive Christmas presents for family and friends.
Factor in that the average UK adult has £3,891 of unsecured debt and the average UK household has £65,618 of total debt and it all adds up to a big squeeze on the nation’s wallets.
With financial problems mounting and consumer confidence plummeting, it’s never been more important for people to keep a close eye on their debts, make sure they don’t increase significantly over Christmas and make sure they’re properly managed.
One of the most effective ways of doing so is with a debt consolidation loan. But what exactly is one? Let’s find out.
A debt consolidation loan is a type of loan that an individual takes out to pay off their existing debts. The individual uses the money from the debt consolidation loan to pay off the people or companies to whom they are in debt, then repays the loan in monthly instalments.
Debt consolidation loans can be used to pay off different types of debt, such as credit cards, overdrafts, store cards or personal loans.
Taking out a debt consolidation loan is an effective way of taking back control of your finances as it allows you to immediately pay off all your debts and leaves you responsible for just one repayment each month.
When you have several lenders to repay each month, it can be easy to forget to make a payment, especially if the repayments are for different amounts and due on different dates. Needless to say, this makes budgeting and general money management much more difficult.
Because bigger loans often come with lower interest rates, debt consolidation loans can also lower your monthly repayment amount, reducing your outgoings. The repayments can also be spread over a period of time that is more suitable for you, which could potentially lower your monthly repayments too.
A cursory glance at almost any British news outlet will give you an indication of the financial difficulties people in the UK currently face. While this is naturally a cause for concern, it’s important to remember that financial help from reputable lenders is available to anyone who needs it.
At Leeds Credit Union, we don’t charge any set-up fees for our debt consolidation loans, nor do we charge any penalties for early loan repayments. For more information or to apply for a loan, click here.