Debt Consolidation Key Reason For Applying For Personal Loan

An increasing number of people are applying for a personal
loan as a means of consolidating their previous debts, an
industry expert has declared.

According to Robin Amlot, senior editor of Moneyextra, more
Britons are now looking towards a personal loan to help
them quickly meet a number of commitments on their
spending, such as credit cards and overdue utility bills -
thus leaving them with more disposable income at the end of
every month. Pointing to various surveys commissioned over
recent months in addition to anecdotal evidence, Mr Amlot
asserted that consolidating debts is now the “key
reason” for taking out a personal loan.

He said: “Two key factors about taking out an
unsecured personal loan as a way of consolidating your
debts is that you are fixing your interest rate - so you
know what you’ll be paying each month - and you are
fixing a date in the future at which you will have cleared
the debt.”

However, the Moneyextra editor warned prospective borrowers
considering make an application for such a loan to use the
money that they receive wisely and to avoid getting further
into the red. “Using a personal loan in this way as a
financial management tool makes a great deal of sense but
only if you are then disciplined enough not to run up
further debt on your credit card(s) and overdraft in
addition to the loan you are now paying down,” Mr
Amlot asserted.

In addition, he pointed out that a number of Britons are
taking steps to reduce pressure on their spending as the
effect of the recent credit crunch begins to impact
“directly” upon those consumers who are already
overstretched financially. He stated that in the run-up to
Christmas it is unlikely that the country will
“collectively be going further into debt to
spend”. Mr Amlot suggested that a number of people
are “actively” trying to reduce the amount of
money they owe or transfer their borrowing to a cheaper
basis, with a debt consolidation loan one possible way of
reducing lending commitments. The editor also asserted that
borrowers are finding it more difficult to take on further
debt, whether this is through a secured loan, credit card
or overdraft, while high street retailers have expressed
concern that they will face a tough Christmas this year due
to a shortfall in consumer spending.

Earlier this year, Susan Hannums, savings manager at AWD
Chase de Vere, reported that more people are set to borrow
money, through avenues such as secured loans and credit and
store cards, in an attempt to help fund spending as the
festive season approaches. The rising popularity of
applying for a loan at this time of year was partially
attested to the rising cost of seasonal gifts and food.
However, she asserted that as mortgage costs are set to
increase, due to the Bank of England’s series of base
rate rises over the last year and a half, more homeowners
could see themselves struggling financially in the run-up
to Christmas. Ms Hannums also pointed out that the new year
often sees a vast number of Britons develop difficulties in
managing their money, with the taking out of a debt
consolidation loan one possible way of alleviating such
pressures.

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Abbi Rouse writes for All About Loans where visitors can
apply online for cheap loans. We also specialise in bad
credit loans, and debt consolidation. Vist Today:
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