FOREX Magazine
IBP Finance I
IBP Finance I
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Ins and outs of debt<br />
consolidation in Europe<br />
Credit is a convenient way of buying goods<br />
you need now, then paying for them over a<br />
period of time. However, according to a<br />
recent report by The Money Charity, the<br />
average UK household has nearly £8,000 in<br />
consumer credit debt – from a combination<br />
of things such as personal loans, credit and<br />
store cards and overdrafts.<br />
If you’re managing multiple lines of credit, it<br />
can be challenging to stay on top of<br />
repayment dates and interest rates. So, one<br />
option is to consider consolidating your debts<br />
into a single loan.<br />
We take a look at the ins and outs of debt<br />
consolidation. ‘Taking out a loan to sort out<br />
your debts might sound counterintuitive - yet<br />
it could end up saving you money.'<br />
What is debt consolidation?<br />
Debt consolidation is using one loan to pay<br />
off all your outstanding debts - such as<br />
personal loans, overdrafts, store cards and<br />
credit cards. This can help you regain control<br />
of your personal finances, particularly if<br />
you’re accruing interest on multiple loans or<br />
finding it hard to manage several monthly<br />
repayments.<br />
How can taking out a new loan help you pay off<br />
existing debts?<br />
By consolidating all your debts into a single loan,<br />
you’ll have a clearer view of your finances. This<br />
makes it easier to organize your monthly budget,<br />
borrow to pay them all off – make sure you refer<br />
to the terms of the loan and include any interest<br />
owing, early exit fees or other charges.<br />
It also helps to know how much the total<br />
repayments for all your loans would be, if you<br />
continued as you are. This way you can make<br />
sure you choose a loan provider that won’t just<br />
help you consolidate your debts but also save<br />
you money in the long run.<br />
Choosing a financial provider<br />
It’s important to choose a reputable financial<br />
provider that meets your needs – so make sure<br />
you do your research in advance.<br />
Things to consider:<br />
What monthly repayments can you afford?<br />
Be honest: it’s vital to choose a loan that works for<br />
your circumstances.<br />
Interest rates (APR). How do they compare to<br />
your current rates? Are these fixed or variable?<br />
Ideally, you’ll be looking for a fixed interest rate<br />
that’s lower than your current providers’.<br />
Term of the loan and total amount owing. How<br />
does the length of the loan affect the total<br />
amount you end up paying? If you can<br />
afford it, would you be better off paying<br />
more every month for a shorter term? It might<br />
help to use a debt consolidation calculator.<br />
Fees and charges. Are there fees for setting<br />
up the loan, or early exit fees if you’re able to<br />
pay it off sooner than anticipated? Include<br />
these in your calculations.<br />
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