A debt consolidation loan is when you take out a new personal loan to repay all, or some, outstanding debts through a single monthly repayment. You can use it to pay off debt for other loans, credit cards and more. It can be a useful tool for millions, if used correctly. Moolr offer a range of competitive loans that could help you sort out your finances. We look at how to consolidate debt.
Consolidating will of course not make your debts disappear, merging them into one personal loan could reduce your monthly outgoings and help you better manage your money – as long as you can afford the repayments. The average household had £7,616 of consumer debt in December 2017, according to the Money Charity. Thus, according to the Money Supermarket website, if you borrowed £7,616 to consolidate your debt over three years, at a representative rate of 3.6% APR and an annual interest rate of 3.60% fixed, you would pay 36 monthly instalments of £223.31. The total charge for credit would be £423.02 and the total amount repayable would be £8,039.02.
If the cost of the proposed new arrangement costs less tan existing costs, then it is the correct thing to do, as long as you can comfortably make monthly repayments.
The first option is to transfer debts to a single credit card. This is a serious option if you can source a low-rate credit card or at least one that offers an introductory low interest rate that lets you tackle the debt wit lower interest. You need to secure a low transfer fee so that it makes sense financially. Also, if you’re only getting a low introductory rate, pay attention to how long it lasts. Generally, it’s a year at the most. Do not use the card for purchases, as you will pay the normal APR on that balance. Leave the card alone and endeavour to pay off as much of the balance as soon as possible.
Another great option is of course to allow Moolr to source you a competitive loan at great rates. If you can take a loan out at lower interest rates than what you are paying on existing debts, then this makes sense. One benefit of a personal loan is that it doesn’t require collateral, meaning you don’t have to put your house, car, or other assets on the line to secure the loan. Your assets are safe. Typically, you need a good credit score to obtain these loans, especially if you want a reasonable interest rate. Moolr are passionate however about finding finance for all.
Take our no-obligation quote to see what sort are offers we could help you with. You will not be pressured to proceed, and the process leaves no mark on your credit card.