According to the Bank of England, the amount of money owed by consumers in the UK has edged closer to the symbolic £1 trillion mark. As long as figures such as these keep getting reported, the debt consolidation industry will keep flourishing.
Consolidation Loans as a loan category originated as more and more people found themselves thrust into the debt maze. People who have too many outstanding debts to be paid draw out a debt consolidation loan.
Now let us explore how people end up in situations, which prompt them to take out a loan. Mortgage is one of the most common debts that UK residents incur. Next in line are credit cards. Naïve consumers often fall prey to lucrative advertising done by the credit card companies. The result is often detrimental to their own welfare as they end up using several credit cards at the same time. Add to this, other loans like home improvement loans, car loans etc. and you are all set to face a financial crunch.
But what is consoling is that now more and more UK borrowers are seeking help for their debt problems. The most effective means of bidding farewell to your debt worries is by availing a consolidation loan.
A Debt Consolidation Loan does the following:
• Collates all your debts into a single payment.
• So now you dont have to worry about paying multiple payments in the same month.
• Also, the interest rate on this combined loan comes out to be a lot lesser than what you would otherwise have to pay on your separate loans.
• You now have to deal with only when creditor instead of many.
The next question that pops up is who lends these loans. This loans are like personal loans that are available with the usual banks and other lending institutions. This Loans are becoming increasingly accessible with the presence of websites. Online services have actually known to bypass high street banks when it comes to lending debt consolidation loans.
This is how these online debt consolidation loan companies work:
• You are required to submit your details online using an enquiry form.
• Your details are then forwarded by the website to their network of lenders.
• You then receive their best offers.
• You can then select the one that most suits you.
Once your debt consolidation loan is sanctioned, your lender deals with your debt problems by either paying off the creditor through one and final payment or by requesting the creditor to freeze or lower the rate of interest. So now you have to worry about paying only a single monthly instalment instead of many.
No matter how messy your debt situation is there is always help at hand. But the first step needs to be taken from your side. You need to admit that you have a debt problem and then find means to get rid of them.
The author is a business writer specializing in finance and credit products and has written authoritative articles on the finance industry. He has done his masters in Business Administration and is currently assisting http://www.adverse-credit-debt-consolidation.co.uk as a finance specialist.
