Here is another topic for open discussion. I’m sure you have heard many people offer advice with “Don’t take out another loan” or “Don’t borrow more money”. On the face of it they are right. Consolidation loans are simply storing up your debt for another day. However, they do have the practical solution of putting all your high interest loans into one basket with what should be a lower interest rate, giving you some time and space to sort yourself out and lower your monthly repayments.
Secured or unsecured?
An unsecured loan can make sense for someone who has multiple high interest debts which are causing them to pay significant amounts in monthly payments. If they can afford to consolidate, and if the lenders are satisfied that they will reliably make the monthly payments, then this is often a suitable approach to resolving a debt problem.
However, unsecured loans can also run the same high interest rates as some credit and store cards so be careful who you apply to.
If you are a homeowner, a secured loan is also a good option to look into. Your current bank / lender will be able to give you their latest loan options and rates. Although if you have a less than perfect credit rating, you may have to go to a lender who offers loan products that are accepted even if you have credit issues or a lower income.
The options you have really depend upon your status and current circumstances. I would welcome comments from anybody who has been encouraged to take out a conslidation loan or if you simply need advice on this matter.
IVA60 Insolvency Practitioner