Wrong Tern Finances

Simplifying your finances

If you’re repaying several unsecured debts every month and would like to make the way you manage your finances just a bit simpler, a debt consolidation loan could be the ideal approach.

 

Not only could it stop you having to make multiple payments every month, but it could also reduce your monthly outgoings – making your budget that bit more flexible.

 

What is a debt consolidation loan?

A debt consolidation loan is a new loan you could take out in order to pay off all your existing unsecured debts – such as credit cards, store cards and personal loans. By consolidating your debts with a loan, all your currents debts will be effectively rolled into a single debt – which you will then begin to repay with single monthly repayments.

 

You’ll only have to make these payments to a single lender – so if you’ve been concerned about the sheer number of debts you need to keep an eye on and/or worried about making every payment on time, you could feel like a real weight has been lifted off your shoulders.

 

However, taking out a debt consolidation loan could only be appropriate if you’re already relatively comfortable financially, i.e. you can actually afford your unsecured debt payments as they stand. Furthermore, as with any type of loan, you must be able to (a) commit to making regular monthly payments, and (b) maintain these monthly payments until you’ve paid the loan off in full.

 

How could debt consolidation reduce my outgoings?

You may be able to arrange to repay the debt consolidation loan over a longer period – say over five years, rather than three. By opting for a longer repayment period, your payments will be smaller – so you won’t see as much money leaving your account every month just to repay your debt.

 

As a result, this could make your budget that bit more flexible and ‘free up’ some more room in your finances – which could make covering your monthly costs that bit simpler.

 

However, repaying debt more slowly also means it’ll be accruing interest for longer, so it’ll cost you more in the long run.