A debt consolidation loan lets you pay down existing debts by reimbursing them with a single easily manageable payment which is due every month. With all your debts being discharged, you only have to make one convenient monthly repayment to pay off the debt consolidation loan instead of keeping track of countless deadlines and several different lenders. Debt consolidation loans will help you to keep your finances in your control and live a debt-free life.
Type of Debt Consolidation loans Available to you
There are two major types of credit card debt consolidation loans available today and are referred to as secured and unsecured loans. The kind of loan that you choose will depend on the amount you have to borrow, your credit score and whether you own a property or not.
A secured loan is one which is protected by some form of collateral and is available to only those borrowers who own a property. The main advantage of this loan is that you are charged a lower interest rate and at the same time, are able to borrow a significant amount. The only downside is that if you’re not able to reimburse the payment, your property would be at a huge risk and there’s a chance you could lose it.
An unsecured loan is one which is not secured to any equity, and you don’t have to own a property to be eligible for this type of loan. Your permissibility is mainly based on your credit history and your ability to pay back the loan on the basis of your financial situation. These loans can also be referred to as personal loans and are a bit difficult to be sanctioned by the lender if your credit score is bad. However, you can still get unsecured debt consolidation loans with poor credit, but the rate of the interest that will be charged can be quite high, and there might be some limitations on the borrowing amount.
Applying for Debt Consolidation with Bad Credit UK
Whenever you apply for debt consolidation loans with bad credit, most lenders and brokerage companies will check your credit record to evaluate whether you are eligible for the loan. On the plus side, having a bad credit is not a stumbling block to acquiring consolidation loans as there are many ways in which you can attain the consolidation solutions which are right for you and match your financial situation and personal objectives. Many lenders and financial institutions specialize in working for people who have poor credit scores and are willing to offer them bad credit consolidation loans, regardless of the financial difficulties they’ve had in the past.
Debt consolidation options for bad credit are available, but there are also a few drawbacks that come with this. If you have a below-average credit score, you’ll have to pay a higher rate of interest. In fact, the lower the credit scores, the higher the interest rate that you will have to pay. Another major drawback is that you will likely have some limitations on the borrowing amount. Apart from these two inconveniences, the rest of the process goes quite smoothly.
The loan that you will be able to obtain quite easily even if you have bad credit is the loan against the property since the risk associated with this type of loan is much lower as compared to the personal loans.
Let’s take a look at how you can find the best debt consolidation bad credit UK loans:
Calculate how much you owe
Before you go searching for a bad credit consolidation plan, you’ll need to work out the sum total of your existing debts. Bad credit consolidation loans generally unify your debts from loans, credit cards and overdrafts.
Determine what amount are you capable of paying each month
You must establish a budget and analyze what your capacity to pay on a monthly basis before choosing any debt consolidation loans is. This step is very crucial, especially if you have a poor credit score as it will help in preventing any further damage to your credit.
Compare the rates for loans that fit your needs
When you are searching for loans for debt consolidation bad credit UK, you should select the one which has the lowest rate. It will be ideal for you to borrow over the shortest possible time and make sure that your monthly payments are affordable.
If you feel like your debt is causing you to be stressed all the time and your finances have gone out of hand, you should apply for a debt consolidation solution with a trusted financial institution at the earliest opportunity.