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The purpose of a debt consolidation loan is to consolidate your existing loans into a new loan and give yourself longer to repay the debt. That way your monthly outgoings can be reduced.
Normally, debt consolidation loans are secured against your home - therefore you need to own your own home. However, if you have a good credit history, your lender may agree to an unsecured loan.
If the lender does agree to give you an unsecured loan, then the available repayment periods usually range from 3 to 15 years. As you are trying to reduce your monthly outgoings, the odds are that you will need the loan period to be at the upper end of this 3 to 15 year range.
Secured loans can be spread over much longer periods - often up to 25 years - and the interest rates will be lower than for a broadly equivalent unsecured loan.
When you take out a debt consolidation loan, indeed any loan, ensure that the repayment terms are manageable for you. Always check out that you can comfortably afford the monthly repayments.
It may also be a good idea to take out Loan Payment Protection Insurance in order to ensure that you can afford to maintain the loan repayments if you were off work through illness, accident or unemployment. However, always buy a standalone insurance policy that you pay separately to your loan each month. These policies are invariably much cheaper than policies bought in conjunction with the loan itself and they are far more flexible.
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