Consolidation Loans…. Do They Offer You A Solution?

Not many predicaments are worse than drowning in a sea of debt. But don't despair, debt consolidation offers a lifeline for some people. This article highlights the benefits and disadvantages of debt consolidation, as well as advising on how this kind of solution can work for you.

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Life Insurance News

The catchphrase of this decade seems to be buy now – pay later or maybe that should read buy now – worry later. Perhaps you have reined in your spending and everything is just about OK at the moment…..however there is always temptation around the corner. Stores are the worst offenders! You buy an item which is well within your budget, and you go to the cash desk to pay. The cashier offers you a store card with an immediate discount for items you buy today. You can immediately feel yourself sinking into a mire of debt……yet another commitment to funds.

Should you ever sink into that mire yourself, then the answer could be a consolidation loan. If you can stick to a rigid plan of action, it could save you many anxious nights of worry. However, a word of warning, research has shown that 40 per cent of people opting for a consolidation solution accumulate yet more debt, making matters worse.

If borrowers can control their spending and maintain regular monthly repayments, these repayments can be substantially reduced, as they are spread over a far longer period than a short term loan. This period can be as much as 15 years, although a loan of 16,000 pounds repaid over 8 years is typical.

The most important aspect of a repayment loan is its flexibility. Circumstances are bound to change over the term of the loan. For example, you may receive a windfall…..get a better job….or, if you are a youngster, you may become financially independent. You should check that, if you are in the fortunate position to repay the loan early, you will not incur any penalty charges.

Statistics show that twice as many men, compared to women, manage to settle their debts early.

You would be wise to approach a financial adviser, who has had experience of the problems that debts create. The best place to find an adviser is through searching on-line. You must be totally honest and open with them, as you cannot expect good advice if the adviser himself is unaware of all of the facts.

At the same time as being offered a store card, you may find that Payment Protection Insurance (PPI) crops up. Many salespersons will have no idea what the benefits of PPI are. It is actually designed to cover your monthly loan repayments if you fall ill, are involved in an accident or become unemployed. PPI is not available for people who are self-employed or work on a commission basis. Even people out of work have been sold PPI…..needless to say it would be totally useless to them. There are changes afoot for PPI, but in the meantime………..

The terms of the agreement should be checked very carefully, particularly as regards waiting times, which is the time you are out of work or sick. Normally you have to wait 30 days before making a claim. The start date would be the commencement of your first sick note and the finish date is when you return to work.

The most generous PPI plans pay out from the first day you are sick or out of work, although you would probably not submit a claim until day 30, so you will always be owed a back payment.

If you come to the conclusion that PPI is right for you, then bear in mind that it can be purchased as a stand-alone product, although it would be prudent to take the advice of a financial adviser, who will source the right plan to suit your needs.