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UK consumer debt consolidation loan
Consumer debt consolidation loan
Recent Consumer debt consolidation loan data has shown that some consumers are making their already worrying financial situation even worse by taking out a high APR debt consolidation loan to pay off all of their smaller debts, but then failing to close other accounts and re-spending on them, placing them in an even higher level of debt than they were in before consolidating their finances.
This comes to light as the current (2006) UK debt levels reached an all time high of £1,268 billion in 2006, a staggering 217% increase from £400 million 13 years ago.
Earlier this year revealed that 64% of those taking out debt consolidation loans did not close other lines of credit and actually went on to spend an average of £2,300 in addition to the newly granted loan amount. These reports demonstrate the overwhelming need for clever financial planning as it can help households save more than £160 per year in interest.
| UK Consumer household debt example |
| Credit card debt | £1,227 |
| Loan | £2,658 |
| overdraft balance | £401 |
| Average household debt | £4,286 |
Average household debt £4,286 could end up paying £296 in interest alone over 12 months. However, by repaying the debt immediately with a low rate loan (such as Unsecured debt consolidation loan offering 5.8%APR) and then repaying the full loan back over a year, a customer would pay £133 in interest - a saving of £163.
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