Do you want to reduce your outgoings?

At a time when many of our monthly budgets have to stretch further just to cover the cost of living, having a bit more flexibility with our finances can make a big difference.

If you’re managing several debts, consolidating them with a debt consolidation loan could make repaying them easier – and ‘free up’ some extra room in your finances.

Here’s how consolidating your debts could help you.

How does a debt consolidation loan work?

Consolidating your debts basically means grouping several existing debts together, and paying them off in one go with a new loan. By doing this, you’ll effectively be left with just the debt consolidation loan to repay – and make monthly repayments to only one lender.

As long as you’re already managing your debts well, this could make keeping on top of your unsecured debts simpler, and reduce the likelihood of you missing your monthly repayments.

A debt consolidation loan could also help reduce your outgoings, which can take some pressure off your monthly finances. If you agree to repay the loan over a longer period, your repayments will be smaller – so less of your monthly budget will be eaten up by paying off your debt. However, repaying the loan over a longer period could end up being more expensive overall, as you’ll be paying interest over a longer time too.

As with any other kind of loan, a debt consolidation loan could only be suitable if you can commit to regular monthly payments, and can keep up with them until the total loan is repaid.

By only having one repayment to keep on top of per month, a debt consolidation loan could even help you to protect your credit rating, as it should make it less likely that you’ll miss your payments, or make them late.

Could a debt consolidation loan be right for me?

As long as you’re repaying your debts well, a debt consolidation loan could be a suitable option if you’re looking to reduce your outgoings and make your finances simpler to keep on top of.

Debt Advice Now could give you advice and guidance on the best approach to take to your debts, and whether debt consolidation could be right for you.