Loan to Consolidate Debt
Most borrowers choose to make use of a single loan to consolidate debts that they owe to various lenders. If you are in that sort of an unpleasant situation and are wondering how to structure your debts, then here’s all that you need to know about loan consolidation. These loans come with several advantages such as lower interest rates, lesser monthly payments, and reduced risk of missed payments. However, most people are skeptical about exploring this option due to the fear of getting scammed. Therefore, Money Pig partners with some of the most reputed direct lenders that are licensed by the Financial Conduct Authority (FCA).
We know that the process of consolidating all your debts into a single loan can be overwhelming because you need to put all your trust in one lender. Therefore, we bring you some of the most reliable creditors willing to offer you a loan to consolidate your debts. These professionals have high ethical standards and would walk you through this phase, without any complications. Let us now discuss all that you need to know about borrowing a loan to consolidate debts.
FAQs | Loan to Consolidate Debts
- What is debt consolidation loan?
- What are the different types of loans to consolidate debt?
- What should I know before I borrow a loan to consolidate debts?
- When should I borrow a loan to consolidate debts?
- Where can I get a loan to consolidate debts?
- How to structure a debt consolidation plan?
- Does Money Pig offer a loan to consolidate debts?
- Will I be credit checked if I borrow a loan to consolidate debts?
- Is loan consolidation debt and settlement debt the same thing?
- Do all loans borrowed to consolidate debt charge lower interest rates?
- Does debt consolidation loan hurt my credit score?
- What type of debts can I consolidate?
- Can I borrow a loan to consolidate debts with poor credit history?
- How to ensure that I don't get scammed while borrowing a loan to consolidate debt?
When you owe several debts to multiple creditors, then you may want to consider borrowing a single loan to consolidate debts that you owe to various creditors. So, a debt consolidation loan refers to a single loan borrowed to repay multiple creditors, which can help lower your interest rates and also reduce your monthly payments.
So, when you borrow a loan to consolidate your debts, you are not erasing your liabilities, but only transferring it to one creditor. You must know that loans to consolidate debts may not always be a good option, especially if you borrow one from the wrong lender. To eliminate that possibility, Money Pig teams up with licensed and ethical direct lenders.
However, you need to put in the time and effort required to structure your debts in the right manner, depending on your individual requirements. For some, lowering the monthly payments could be a priority, while there could be others that are more concerned about paying a lesser amount towards the end of the borrowing period. So, after taking these things into account, you must work out the most profitable repayment structure for your loans.
Loans to consolidate debts can be broadly classified into secured debts and unsecured debts. Which type of loan you are offered depends on your credit history, loan amount, repayment capability, and certain other parameters. When you borrow a loan to consolidate your debts from a bank or a credit agency, you seldom get to borrow one without providing collateral — often, your home.
However, we have a network of creditors, who may be willing to offer you an unsecured loan to consolidate debts. Also, we have quite a few direct lenders within our network, who offer fixed interest rates to those who borrow a loan to consolidate debts. So, make sure to list out your requirements in your loan application and we’ll do our best to help you strike the most profitable deal.
If you are trying to consolidate an unsecured loan, then this should be much easier than exiting a loan secured by collateral. That’s mainly because in the case of secured loans, creditors have the right to forfeit the collateral in case of non-repayment. However, this option is not available to creditors who lend unsecured loans, which are usually offered at high-interest rates. In the case of unsecured loans, your creditor does not have any other legitimate means of recovery, other than suing you — something that most lenders refrain from doing due to the high costs involved.
Also, before borrowing a loan to consolidate debts, you need to check the basis on which the interest rates are calculated — flat interest rates or APRs. Usually, loans offered to consolidate debts charge fixed interest rates, which are lower than the APRs. Most people do not realize that APRs are calculated on the principal amount and loan processing fees, unlike a flat rate of interest which is calculated only on the amount borrowed. Another point to note is that the loans offered to consolidate debts are advanced for a longer duration. This sort of arrangement is ideal for those with limited monthly income such as salaried individuals but may not be ideal for everyone else.
You must consider borrowing a loan to consolidate your debts when you are having trouble paying off multiple debts but intend to pay them off gradually. In other words, you must borrow such a loan when your debts are high but manageable. Unless you have the means to repay the loan borrowed to consolidate your existing debts, it makes no sense to borrow one.
Also, consolidating your debts can work very well if your current creditors charge high APRs. In this case, you can consider borrowing a loan to consolidate debts. Most of Money Pig’s direct lenders offer fixed interest rates that remain constant throughout the loan period. Another good reason to borrow a loan to consolidate debts is when you want to bring down your monthly payments. In this case, you can negotiate a longer repayment period, which reduces your monthly obligation.
However, if your debts are completely out of control and you have no means to clear them off then it would be wise to file for insolvency. That’s because when you borrow a loan to consolidate debts, you still need to pay them off.
You can avail a loan to consolidate your debts from banks, credit agencies, financial institutions, or direct lenders. However, the problem arises when it comes to borrowing limits, which is usually lower when you borrow from banks and financial institutions. Often, banks make it obligatory to furnish collateral, which may not always be possible.
Also, most banks and credit agencies run a hard credit check as soon as they receive your loan application. Thereafter, if your loan is rejected it might have a negative impact on your credit score. This possibility can be minimized to the bare minimum by applying through Money Pig, a unique platform that connects you to several licensed and legitimate direct lenders who don't run hard credit checks.
As a responsible intermediary, we rope in only those direct lenders who agree to run a soft credit check only. The Soft credit check is a type of verification that shows your financial records direct lenders, without impacting your credit score. Also, it helps the direct lender to fulfill the mandatory obligation set forth by the FCA with regards to credit checks.
Before you make the big decision to consolidate your existing debts into a single loan, you need to structure your loan. In order to do this in the right manner, you need to classify your debts into high-priority debts, priority debts, and low priority debts. Your high priority debts are those that are secured by collateral such as your home or other real estate property that is at the risk of being forfeited. Priority debts would be the ones that are costing high-interest rates, which needs to be controlled.
Your low priority debts are the ones that contain complex exit clauses and are the least profitable when consolidated. To identify debts that fall under this category you must go through the terms and conditions of your existing debt agreements. More specifically, the penalties imposed for early repayment. Unless you confirm this, the entire purpose of borrowing a loan to consolidate your debts would be defeated.
Usually, when a borrower repays the loan much ahead of time, the lender loses out on the interest that the lender could have earned. To make up for this loss, most lenders include a penalty clause, which you must take into account while calculating the profitability of consolidating your debts. Eventually, you need to calculate the aggregate sum that you would pay after consolidation, and without consolidation of your loans. This comparison would provide useful insights to further structure your loan and make it even more profitable.
Money Pig puts you through several licensed direct lenders willing to offer loans to consolidate debts. Our network of lenders offers both secured and unsecured loans to consolidate debts, depending on your credit history. So, although Money Pig does not offer the loan directly, we let you explore numerous options through a single application. As an intermediary, we work closely with these lenders and are aware of their individual loan approval criteria. This enables us to channelize your loan application to the most appropriate direct lender, based on the details that you furnish in the loan application.
This minimizes the chances of loan rejection and limits the harm that could happen to your credit score. Our network refrains from hard credit checks to make this possible. As soft credit checks do not have any negative repercussions, there’s little that you need to worry about. Also, our loan approval rates are quite high, which minimizes the possibility of loan rejection. However, this isn’t the case when you apply to individual lenders such as banks and other financial institutions that perform hard credit checks and have rigid approval norms.
Yes, according to the rules and regulations applicable to the financial services sector, every lender must run a credit check before advancing a loan. This is to ensure that the person borrowing the loan is capable of repaying it. Most leading banks and financial institutions have strict in-house guidelines to run hard credit checks before approving a loan to consolidate debts. However, at Money Pig, we understand that you are facing problems with your existing debts and wish to overcome those problems by consolidating them.
Therefore, our direct lenders keep the loan eligibility criteria flexible because they are seasoned professionals who do not expect applicants with high credit scores to apply for a loan to consolidate debts. Instead, they structure their offer depending on your credit score regardless of how high or low that is. Also, to avoid any further trouble to our clients, we make it a point to associate ourselves with direct lenders who are willing to approve your loan based on a soft credit check. We do this to protect your current credit scores from dropping any further.
No, a loan to consolidate debt and debt settlement are two entirely different concepts. To begin with, a loan to consolidate debt refers to a single lump sum loan that you borrow in order to settle multiple small debts. As a result, your liability to repay the debt amount shifts from multiple lenders to a single lender, from whom you borrow the lump sum loan to consolidate your many debts.
On the other hand, debt settlement refers to an arrangement between the borrower and the lender, in which the lender agrees to settle the loan at certain exclusive terms and conditions. Often lenders explore this option on unsecured debts which are hard to recover. So, they agree to accept a lesser amount from the borrower and settle the loan.
It depends on the type of loans you owe and the interest rates that you are currently paying. Also, the basis on which the interest rates are calculated is a critical factor that needs to be taken into account. In most cases, it is calculated on the basis of the Annual Percentage Rate (APR), which is generally higher than the fixed interest rates. That’s mainly because APRs are not calculated on the amount you borrow, but instead on the amount that you borrow along with loan processing fees.
So, let’s assume that you borrowed two separate loans of £10,000 each — one at the rate of 6 percent fixed interest and the other at 6 percent APR. In this case, you would pay an annual fixed interest of £600 or monthly fixed interest of £50. However, this may not be the case with your other loan, which isn’t calculated on £10,000 but a higher amount. So, if the loan processing fee is around £1,000 then your 6 percent APR would be £660 because it is calculated on the principal amount plus the loan processing fee.
No, debt consolidation does not hurt your credit score but may prevent further damage to your existing credit score by minimizing the risk of missed monthly repayments. Also, your monthly payments reduce as these loans are often advanced for a longer duration. This works extremely well for salaried persons who are dealing with additional expenses and wish to reduce their monthly payments. Money Pig’s direct lenders are licensed by the FCA and regularly report to the credit agencies. So, timely and prompt repayment of the loan will only help improve your credit score.
Conversely, if you miss payments, then that could hurt your credit score just like it does in case of missed payments and defaults on any type of loans. Therefore, we recommend that you discuss the direct lender’s default and late payment clauses, in detail. This will give you a fair clue of what can happen if you miss payments, and we must admit that our direct lenders are quite flexible in this regard. You can always negotiate this clause with them and request the lender to permit one late payment every year. That would help prevent any damage to your credit score, just in case you don’t receive your salary or wages on time.
Money Pig’s direct lenders offer loans to consolidate debts of any type. However, we recommend that you have a word with the direct lender whose offer you are considering. It always helps to confirm certain specific terms of the loan before entering into a loan agreement. Most of our direct lenders would be willing to let you consolidate unsecured loans, personal loans, overdrafts, credit card dues, car loans, and even your hire purchase agreements. However, your legal obligations or dues such as child support, student loan, court fines, taxes, and certain other expenses cannot be consolidated. In fact, none of the lenders in the UK would be offering loans to consolidate debts of that nature.
Yes, Money Pig’s direct lenders offer loans to consolidate debts irrespective of your credit history. So, do not hesitate to file your loan application regardless of how high or low your credit score is. Also, since we do not charge you for loan application at any stage, nothing should hold you back from applying. Moreover, with a network of direct lenders willing to offer you the most profitable deals, we can definitely find someone willing to help you consolidate your existing debts. Finally, as our lenders stick to running soft credit checks only, there’s little you need to worry about any sort of further damage being caused to your credit score.
Before you borrow a loan to consolidate debts, you must know that every lender is out there to do business. So, there is no free lunch available and you need to be wary of those who offer you that. Most lenders trick borrowers by offering low-interest loans or no-interest loans, which remains so only for a certain period of time. This period is known as the introductory period, after which the lender charges high-interest rates.
Our network of direct lenders is extremely transparent and believes in doing business without misleading our customers. So, they do not mislead you with low-interest introductory offers, which start charging high-interest rates after the expiry of the introductory period. Most of our direct lenders offer low-interest rates, which remain constant throughout the loan period. However, we strongly recommend that before entering into a loan agreement with any of our direct lenders, you clarify this just to be doubly sure.
Other ways to avoid being scammed is by ensuring that the direct lender’s website mentions a physical address, contact details, and an SSL Certificate. An SSL certificate is a green padlock that appears in the browser’s URL box, which indicates that the communication between your website and that of the lender is encrypted. Also, it is recommended that you deal with legitimate direct lenders only, and you can confirm this by looking up for that particular lender on the FCA’s online register.
Money Pig brings you several licensed direct lenders competing to offer you the best loan to consolidate your debts. For the most competitive interest rates, Apply Now.