Research carried out by Sainsburys bank in the UK showed that people these days are less likely to choose debt consolidation for taking out loans. Most people know what a loan is but debt consolidation may not be widely known.
In simple terms, debt consolidation is a process whereby a consumer takes out a loan or other credit agreement in order to pay off two or more existing debts. Some of the common products used to eliminate debt consolidation include and unsecured loan. Loan secured on a mortgage property and a remortgage usually to replace pre-existing first charge mortgage.
There is also the common transfer of balances to a credit card. A key question for banks and other debt consolidation services is how competitive are their rates for paying off loans? Sainsburysbank says that “Debt consolidation is now a much less significant reason for people taking out personal loans than it was two years ago, according to new figures from Sainsbury’s Finance”. The crux is that people are using very competitive loan rates to pay of debt all together rather than consolidate their debts.
A point to note “However, for those with multiple debts, consolidation is still one way to reduce their monthly outgoings as long as they look around for the best rates on the market, which could save them a considerable amount in repayments.” So the question stands: Loans For Debt Consolidation or Not? This is for the individual to answer since they know their position best. Good advice is to shop around to find the best rates for paying off loans. If one is up to his or hers eye balls in debt then debt consolidation loan may be the best option. Even if there is only one debt hanging on the shoulders then a good loan rate could help immensely. If debt consolidation is the prime reason for the personal loan then try to find one that decreases year on year.
So for example, the percentage of the total value of personal loan for debt consolidation purposes should be decreasing for the total number of years of the loan. Be sure to compare the debt consolidation service provider’s percentage table so the best competitive loan rates can be chosen.
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