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Managing multiple debts is highly stressful. Thankfully, debt consolidation can bring much needed relief from the complexities of numerous credit card bills or purchase hire contracts. Here’s a look at the reasons to consolidate your debt into one more manageable amount using a debt consolidation loan from peer-to-peer lenders like Zopa:
Cut out the stress of multiple repayments
Keeping on top of multiple debt repayments can take a real toll on an individual. Looming due dates and the confusion of what is owed to each card make day-to-day budgeting a hassle – with debt being the overwhelming topic on your mind every time you spend. Debt consolidation eliminates stress as multiple repayments are cut down to just one per month. Household budgeting is immediately made easier too, you’ll know exactly how much you need to reserve for just one payment each month.
Make the most of lower interest rates
Debt consolidation will also help you dramatically reduce the whole cost of your debt through lower interest rates. If you’ve been paying the minimum payment on numerous debts you may have only been dealing with the interest element on your account, which leads to a higher total cost throughout the lifetime of each debt. Peer-to-peer lenders offer the low interest rates for their borrowers, especially when compared to the interest rates charged by credit cards and store cards. This means a debt consolidation loan can help cut the costs of interest you’d pay as a whole, compared to paying off the debts separately over time. .
For those who have not necessarily had positive experiences dealing with their banks, peer-to-peer lending enables debt consolation without ever entering a bank. Applications can be made online with decisions made within just 24 hours. Tight criteria are crucial to securing a consolidation loan however, these include the ability to show credit history, identity and proof of UK address for at least 3 years.
Peer-to-peer lending, or social lending as it is also known, is particularly popular with those who would rather work within the community. People borrow from people of all walks of life – from entrepreneurs to pensioners, students to housewives – while enjoying low, marketing leading loan rates.
Get Ready to See a Future Debt Free
With just one repayment each month, and a fixed loan term of between two to five years, planning a long-term strategy for overcoming your debt is much more realistic. Finally, with conscientious repayments monthly, a debt free future will be foreseeable and achievable. Consolidating your debt will help bring real focus to your debt repayment.
The risks of consolidating your debt…
Debt consolidation is not appropriate for everyone. If you have an erratic income, perhaps you work as a freelancer or seasonal worker, then commitment to a larger monthly payment may not be appropriate. For minimal stress, you need to be able to feel comfortable and confident that you can pay back your loan each month. Success with debt consolidation also relies upon not taking on any new, large debts as you pay back your loan.
Be aware that as with taking on any other credit tools, making numerous debt consolidation loan applications in a row can have a negative effect on your credit history