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Do Debt Consolidation Loans Cause More Debt?

It is a common misconception that Debt Consolidation Loans cause people to be in more debt, rather than improve their financial situation. However, what many people fail to understand is that a Debt Consolidation Loan is in fact a good debt solution for many people.

Consolidation Loans are designed to support people in repaying their debts, it is other factors that can occasionally cause people to increase their debt level… Let’s discuss this further.

How could a Debt Consolidation Loan better your financial situation?

There are many ways that a debt consolidation loan could improve your financial circumstances:

  • Monthly unsecured debt repayments are combined into ONE monthly payment that is affordable.
  • Finances become easier to track and manage.
  • You may find that your monthly repayment total has decreased.
  • It may work out cheaper in the long run; if your payments are easier to manage you may be less likely to miss payments and face interest and charges.
  • You will only owe money to 1 company (that’s a lot less creditors to deal with!)

What factors contribute to people’s debt level increasing?

As previously mentioned, it is other decisions that people who have consolidated their debts make, that contribute to their debt level increasing such as taking out a higher amount of credit than their existing debt level.

Another reason the overall debt level could increase, is depending on the APR offered on the loan, if this is higher than the original interest amounts, it could increase the overall amount payable.

Financial advice is available

Here at Consolidation Express, we specialise in supporting people who are in debt. We offer Debt Consolidation Loans of up to £75K and could get you the money you need in as little as 2 hours! We also consider all credit scores and only run a soft credit search on all our customers. Get in touch for help with your debts!

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