A debt consolidation loan just might be the thing you need in order for you to be able to have a better grasp of your finances, even if you have current debts you need to pay off. You could manage and maximize your finances better because you would only have one single debt to pay-off. Not only that, but you would be able to easily increase your credit score to a better standing, most especially if you have a bad credit score. It may be daunting to get a debt consolidation loan to pay off all of your other existing loans or debts, but it is actually an economical solution. For one, you would not have to face multiple and different rates of interest charges, and secondly, you do not have to face late payment fees anymore should you fail to pay off one of your loans or debts at a given time. If you want to maximize your finances, a sure and great way to do it is by first dealing with and managing all of your debts.
Flexible Loan Amounts and Term Payments
With debt consolidation loans, you could borrow as little or as much money you need to pay off all of your existing loans and debts. You can start off with a loan of as little as only £1,000 with £500 increases up to as much as £15,000. For smaller amounts, you have an option to pay off the debt from 12 months up to 36 months, with 6 month increases. For larger amounts, you have the option to pay off the debt starting from 36 or 48 months, up to as long as 60 months. For example, if you have total debts amounting to £9,583.00, you could loan up to £10,000. You can opt to pay it off in 48 months, with a monthly repayment of £384.17, and an interest of £8,440.16 on top of the loan repayment; or pay it off in 54 months, with a smaller monthly repayment of £364.27, but a higher interest of £9,670.58; or a longer stretch of 60 months, with the least monthly repayment of £349 but with a more than doubled interest of £10,940. Whichever payment scheme you choose, it would at least be at an easier pace which you could afford.
Economical Solution to Beat Interest Rates
If you have multiple debts, you are also faced with multiple interest rates at different percentages. If for example, you get a personal loan amounting to £5,000 this automatically has an average Annual Percentage Rate (APR) of 8.04%. Then, if you have an existing car loan of let us say £7,500, you are faced with roughly an APR of 25.4%, and on top of that, you have an unpaid credit card bill of £1,200 with an APR of 29.7%. Imagine your payments, interest on top of each interest – you would be paying off a representative APR of as much as 63.14% for all of your debts! If you choose to borrow £14,000 to pay off all of your existing debts at once, you would only be left with a representative APR of only 29.9%, which represents as much as half of the combined APR’s of all the debts you would have to pay for each month.
Even if you are in a bad place financially because of all your existing debts, it does not mean that you would not be able to get ahead of your finances and have a better management of your money. You can still do that as long as you are economical with all of the choices you are making financially – and with debt consolidation loans, you would not go wrong with beating very high interest rates.
You Do Not Need a Good Credit Standing
Unlike with other loans and other financial aid services, you do not need to be good credit standing in order for you to get approved for a debt consolidation loan. As a matter of fact, it is also a good way for you to be able to increase and improve your credit score throughout the whole loan term, as long as you would be able to pay the full monthly repayment amount in the specified time that you need to.
To get approved for debt consolidation loans, all you need is a guarantor with a good credit standing to help you with the application. The guarantors loan only serves as a protection for the loaning company should you fail to make the monthly repayments. It would be your guarantor’s responsibility to pay it off if you would be unable to. However, for larger loan amounts exceeding £10,000, you would need a guarantor with a good credit standing and who is also a homeowner for you to get approved.