Why are people so negative about consolidation loans?

Phill_Anderson

A money management is a real serious issue which people must see into it. It is the mismanagement of money which leads to bankruptcy, bad credit, and other financial crunches. Also this avoid people from taking loans from bank.
A real and wise management is always needed in terms of economy.

Regards

MYLITTLESISTERLOLA

Consolidation loans have there place for the very disciplined, the fact that you are considering doubling your debt leads me to believe in the next 3 years ( repayment schedule ) you will avail of yet more catalogues, store cards, loans, credit cards leaving you in a bigger mess.

Banks in the current economic climate do not want to take on other lenders debt, if your struggling to pay your repayments now ( and obviously you are otherwise you wouldn't be taking on consolidation loan ) they how will you be effected if interest rates go up, electricty, tax, food etc goes up which over the next 3 years it is very likely it will

If the bank says no they are usually doing it for your own good believe it or not ( obviously they benefit from not having bad debt but imagine the profit they are turning down, they are a business after all )

nearlyrich

I have seen people do this and one of my friends ended up with £3k out of the sale of a £100k property after her (now ex) husband consolidated and remortgaged time and again, they had been married over 30 years and should have had a mortgae free house but he kept refinancing and lost the lot.

Have a read of the Debt free wannabe boards and some of the stories on there will explain why not a lot better than I can.

RobertoMoir

I'd never say never, but I'd say approach with caution. From the lender's point of view, there's no way to force you to use your consolidation loan to pay off your debts so a £5k debt to several lenders you want to consolidate and a £5k "consolidation loan" isn't a total debt load on the borrower of £5k in terms of risk to the lender, it's a debt load of £10k.

And well, long story short, read my signature for the biggest problem with consolidation loans.

fozmcfc

Twice I've consolidated and twice it has just led to more debt.

First time I took out a £2000 loan to clear my £1700 credit card (which I did) but end result 6 months later, after basically paying the interest off, I still owed the loan £2000 and the credit card was back at £1500.

Second time was much worse, owed about £2000 on a loan and was paying it off. Owed about £7000 on credit cards and another loan. Had to call the bank about something and ended up coming off the phone having agreed to a £7500 loan, cause I was told I could get it if I wanted it.

The loan is still the one in my signature and the other debt I was going to pay off, but didn't whilst much less now since I finally accept the mess I was getting in, is in my signature. Luckily I learnt my lesson now and everything but the Natwest loan will be paid off by September as I have saved up all last year to pay it off, then I'll tackle the Natwest loan and see if I can pay it off early and save.