VIEWS: 13 PAGES: 1 POSTED ON: 11/7/2009
“Debt consolidation flavour of the month” Over six million people have taken on more debt in the past three years in a bid to get their borrowing under control, new research shows. Around one in seven adults have turned to debt consolidation to ease their financial problems with unsecured personal loans the most popular choice. Said Gerald Irwin of Sutton Coldfield based licensed insolvency practitioners, Irwin & Company: “The amounts currently being borrowed to clear previous debts are not trivial – the average consolidation loan is £13,000. Around 6% of those who have consolidated debts in the past three years have borrowed more than £50,000, circa 360,000 people”. Monthly repayments on a £13,000 personal loan over three years at the lowest unsecured personal loan rate of around 5.9% would be £393.99 a month. Anyone borrowing £50,000 would have no option but to re-mortgage or take out a secured loan. And while unsecured personal loans are the most popular choice for consolidating debts many people are piling the extra debt on their mortgages or taking out secured loans against their property with the risk that if they default they could lose their homes. “The UK’s debt crisis is a serious concern and borrowers are starting to feel the strain. Debt consolidation can be a sensible way to get your finances under control if you owe money to different lenders at varying rates of interest. Theoretically you can reduce your monthly repayments and make your debts manageable. However it only works if you accept consolidation is a wake-up call to get your borrowing under control and then work to become debt-free. There has to be some concern that many people simply see consolidation as a way of keeping on borrowing” added Gerald.
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