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One of the fundamental aims of a debt consolidation loan is to reduce the amount of money you have to pay out each month in order to service your borrowing.
This is achieved by paying off your existing loans with the money received from your debt consolidation loan and then spreading the repayment of the consolidation loan over a longer period. In this way your monthly repayment can be reduced.
As interest rates are now at historically low levels, the rate of interest on the consolidation loan may be lower than the average you were paying on your previous loans. If so, a lower interest rate will also contribute to lowering your monthly repayment.
However, be aware that the lender will need to look carefully at your credit history. So long as you have maintained a good credit record there should be no problem. If you have missed payments or defaulted on any of your other loans or credit cards, the position will be different. The lender will have to make a decision whether it is prepared to offer you the sum you have requested and if so, at what interest rate.
The result could be that you are offered a debt consolidation loan but only if you agree to a secured loan - that means that you will have to be a homeowner and if you fail to maintain the repayments as agreed, the lender could apply to the courts to repossess and sell your house.
Basically, if you are having difficulty repaying your existing loans, you need personal advice. The last thing you want is to take out a new loan and then find that you are still having financial problems. You should discuss your current repayment problems with your loans adviser.
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