Advantage Loans - Debt Consolidation

Debt consolidation involves taking out a loan in order to pay off many others. This is often done to secure a lower interest rate, secure a fixed interest rate or for the convenience of servicing only one loan.

A debt consolidation loan can be used to pay off existing debts in part or in full. The money borrowed in a loan will usually be used to pay off unsecured debts, such as:

• multiple credit cards and store cards
• overdrafts and bank loans
• hire purchase agreements
• mail order catalogue debts etc.

The aim of reconsolidation is to pay a reduced monthly sum to a single creditor for a longer period, freeing up some spare money in the process. It is important to understand that debt consolidation is a trade off. When considering the total cost of the loan, you have to balance any personal benefits to paying a reduced monthly payment, even if the payments are stretched over a longer length of time.

When a consolidation loan is taken out, the issuer will either make direct payments to your existing creditors, or will advance the loan to you directly, and you will be responsible for paying off our debts yourself.