Nearly one in three loans to be for debt consolidation

Nearly one in three loans to be for debt consolidation

For many of the people that have ended up with a range of debts that are left hanging around their necks, debt consolidation has proven to be an effective solution. As a result of debt consolidation many people have been able to reduce the amount that they pay out each month by consolidating all of their individual debts into one. This has also enabled them to reduce the number of debts that they have to deal with, which can make financial management easier and reduce the chances of missed and late payments, which can lead to charges.

One lender has recently made a prediction about consolidation loans for the six weeks leading up to the end of March based partly on loan consolidation figures from the past six weeks up until the middle of February. The prediction comes from Sainsbury’s Loans, which predicts that by the end of March almost 160,000 personal loans will have been taken out either solely or partly for the consolidation of debts.

This means that during the twelve week period around one in every three loans will be consolidation loans. The total value of the loans, according to Sainsbury’s Loans, will be £1.5 billion which equates to an average size consolidation loan of £9800. Many people who take out these loans will be using them to repay credit cards, smaller loans, overdrafts and other unsecured debt that is swallowing up their income. Getting a low rate consolidation loan could help many people to reduce the amount of that they pay each month and reduce the amount of interest that they pay.

One official said: “By consolidating debt, many people are able to avoid being tipped over the financial edge, as they can reduce their repayments quite significantly in some cases.”

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