Consolidation loans "acceptable" solution

Fri, 04 Jan 2008

Taking out a personal loan to consolidate debts built up on credit cards or through other loans is "acceptable" if it means a paying a more favourable interest rate, according to a debt expert.

Iain Wrenshall, director of Debt Help UK, said that such personal loans can be viable if a borrower is "confident" that they are taking on "affordable" monthly repayments .

"A consolidation loan can be very effective, because under the right circumstances it can lower your expenditure and make your borrowings cheaper, making them more affordable," he commented.

However, Mr Wrenshall warned that it may not be an ideal solution to borrow more money in order to get out of debt as a consolidation loan can exacerbate the situation.

Recent research by uSwitch revealed that consumers across the UK are paying approximately £93 billion in interest on personal loans, credit cards, overdrafts and mortgages .

The UK's total personal debt is estimated to stand at £1.39 trillion.
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