Loans Choice
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Pay-day loans give you a quick source of cash until pay day.
Secured personal loans are also called homeowner loans.
A tenant loan is a cheap unsecured personal loan with a better rate of interest.
Low cost unsecured loans are available from banks and building societies.
These are used to fund courses to improve your job skills.
Cheap car loans funded by Hire Purchase, Personal Contract Purchase etc.
Cheap credit cards can be costly if not used properly!
Equity release will help to unlock more cash, but you must read our guide first.
An IVA can actually save you money.
A cheap mortgage or remortgage can also be used for home improvement.
AER APR and EAR define cheap loans and savings.
Repair, update and check your poor credit rating.
Debt consolidation loans are not always a good idea
Credit Debt Consolidation Loans
Debt consolidation loans, sometimes called Homeowner Loans, can be useful if you are having trouble meeting monthly repayments. On the other hand it could make matters worse. Consider the following for and against details.
For Debt Consolidation
- If you choose wisely it could reduce your total payments. This assumes you can replace a high interest loan, such as a credit card debt, with a cheaper personal loan.
- You can reduce your total monthly repayments.
- You will only have one repayment and one lender to deal with each month.
- It may be a temporary solution to an immediate debt problem if an existing creditor is pressurising you.
Against Debt Consolidation
- You can end up paying more if the loan is over a longer period.
- It may involve you in spending more on the costs of setting up a new loan.
- You are, in effect, putting all your eggs in one basket. If the new lender puts pressure on you it will be for the whole amount you owe, not just one part of it.
- Lastly, but most importantly, your home will be at risk if your loan is secured on it.
You should accept that if you need a debt consolidation loan, you are probably mishandling your monetary affairs, sorry to point this out by the way! If you need advice on how to correct this, a list of recommended sources of free advice can be found on our Directory page.
If you have borrowed a large sum on a high interest credit card, you should certainly do something about it. You may possibly be able to transfer the balance to a cheaper credit card but if you have a number of other loans from different lenders, it could make sense to consolidate them under one loan. By paying back this loan over a longer period will make the installments more affordable. However, even if you can find a loan with a lower rate of interest than you are currently paying, you may well end up paying more in total because you are taking longer to do it. If you take this course of action please remember this is almost certainly a last chance to solve your problems. To avoid being tempted to use your old high interest credit card, don't forget to chop it up with scissors when you obtain your new loan!
It costs more to take out a loan if you have a poor credit record. Bad credit debt consolidation is a useful tool to improve your credit rating. Once your score has improved you can get more credit with a lower interest rate.
Advertisers on TV or in the newspapers nearly always refer to a debt consolidation loan secured on a second mortgage with all the risks involved. Look at it this way... I bet my house and home that I can keep up my repayments... this is the actual risk you are taking; unexpected things do happen such as losing your job or being taken ill.
If your credit rating is good enough you may be able to obtain a personal loan from a bank or other lender that you can use as an unsecured debt consolidation loan to pay off other, more expensive debts. In any case always check the small print of any loan for details such as: whether the loan rate is fixed or variable, what happens if you miss a payment, what happens if you want to repay earlier than expected or, if the loan is secured on property, what happens if you want to move?