A number of factors can soon conspire that result in you having various debts to pay off each month, from credit cards, loan repayments and even paying back friends and family for borrowed finances. If you’re someone who uses a credit card regularly and has at least one other outstanding loan repayment then a consolidation loan could be helpful.
Depending on the amount you owe, and your current financial situation, a consolidation loan is not always beneficial. However, if you can identify with the following it is worth considering to improve your situation.
Easier to Manage Debts
It can be hard keeping track of all the repayments you have, especially when they have to be made at different dates. Missing one can lead to additional costs on top, so putting them all together into one loan reduces this risk and makes it simple to see how much you owe each month. For the disorganised it can be extremely helpful.
A secured loan for consolidation from a company like Nemo Personal Finance ensure these multiple monthly repayments are put into one place. You will know the exact date an amount the payment will go out each month making it easier for you to manage your finances.* Remember, a Nemo loan is secured against your home so you must ensure you can afford the repayments.
Depending on how your debts are spread out, consolidating them all in one place under one interest rate could potentially cut down the amount of interest and therefore the total you will have to pay back. If some of your payments are currently attached to high interest rates or if the total interest is staggering then a consolidation loan should help.
Improved Credit Rating
Placing all your payments in one consolidation loan means you can close every other credit card and loan accounts immediately. This should greatly improve your credit rating as it helps you get on top of your financial situation and proves you are in control of them, which will be helpful in the future. You should also cut up any credit cards and cancel accounts with overdrafts to prevent against overspending again.
*Please be aware that the APR on your new loan with Nemo may be higher than the APR on the credit you are settling and may cost more over the course of the loan.