(1888PressRelease)
May 12, 2007 - A recent survey carried out by an independent comparison site – indicates that three out of five people who opt for consolidation loans go on to accumulate more debts.
Report shows that an average consolidation loan of £16,459 takes nearly eight years to pay off. But, only a quarter manage to clear their debts early due to consolidation. And, majority does not, even when given a chance to.
Highlighting the benefits and dangers of consolidation loans, the HOD of the comparison site stated that “It can make sense to roll up several expensive debts into one affordable monthly payment if you are faced with a myriad of claims on your money.”
He further said, “Consolidation loans can be a welcome lifeline for people caught in financial difficulties. But the lifeline can quickly turn into a noose if you submit to the temptation of running up further debts."
In his opinion, these loans should be used to minimise repayments or to pay off the highest interest debt first. His advice to borrowers is that they should ask for a flexible fixed rate loan, as it will not be subject to market fluctuations.
According to another survey, nearly 6 million people in the UK are availing personal loans to consolidate their debts. The data gathered also indicates that most people prefer to use unsecured loans to consolidate their debts, as the interest rates of these loans are normally lower than the interest rates of payment cards like credit cards and store cards.
http://www.chance4finance.co.uk
