Friday, March 23, 2007
Category:
Consolidation
In the last three years more than six million people have opted to consolidate their debts in order to get their borrowing under control.
This is according to new research from MoneyExpert.com who found that one in seven adults consolidated debt.
On average people are borrowing £13,000 to consolidate their debts. Six per cent of those that have consolidated debts in the last three years have had to borrow more than £50,000. Six per cent equates to 360,000 people.
Unsecured personal loans were revealed to be the most popular choice for consolidating debt, with 36 per cent of those surveyed opting for this method. 18 per cent stated that they consolidated debt with a re-mortgage and 15 per cent chose to switch to a credit card with a zero per cent rate.
Sean Gardner, Chief Executive of MoneyExpert.com said, ‘The UK’s debt crisis is a serious concern and borrowers are starting to feel the strain. Debt consolidation is entirely sensible and a good way to get your finances under control if you owe money to different lenders at varying rates of interest. Theoretically you can reduce your monthly repayments and make your debts more manageable. However it only works if you accept consolidation is a wake up call to get your borrowing under control and then work to become debt-free. There has to be some concern that many people simply see consolidation as a way of keeping on borrowing.
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Homeowners looking to consolidate debt could consider doing so with a secured debt consolidation loan. One of many options to consolidate debt, secured loans can be repaid over a term to suit the borrower, this is typically from 5 to 25 years.
Debt consolidation loans may be used to put all outstanding debts into one place which means the need to juggle several different payments is reduced. Those taking debt consolidation loans will know the exact date and amount that will be repaid each month. With a debt consolidation loan, it is important to remember that repaying borrowing over a longer term will increase overall interest charges.
