Warning issued over debt consolidation loans

While opting for a debt consolidation loan can prove to be a shrewd financial move for many people, an individual must avoid slipping behind on subsequent repayments, Helen Saxon, spokesperson for the Finance and Leasing Association (FLA) suggests.

“They [debt consolidation loans] can be a positive move, because personal loans generally have lower interest rates than credit cards,” commented Ms Saxon.

“But you do have to be careful if you are consolidating that you don’t run up the debt again and that you can pay off any loan that you take out,” she continued.

Last month, figures released by MoneyExpert.com revealed that in excess of six million people in the UK have taken out a debt consolidation loan over the course of the last three years.