Unsecured loan ‘could help clear debts’

Consolidating debts with a cheap loan is a good way of reducing monthly payments and improving credit ratings, according to the price comparison site.

And taking out a loan can also help to finalise borrowings quickly because payments are fixed and are set for a number of years.

“Those planning to take out a loan should act now as there are some excellent rates on offer in the market,” said Nick White, director of personal finance at uSwitch.

“In recent months we have seen rates creeping back up above the six per cent mark and it is unlikely that those providers who are still below this can maintain it for much longer.”

Alliance & Leicester spokesman Steve Gracey said that multiple debtors should consider taking out a personal loan to manage their finances because it “is a lot easier than writing cheques here, there and everywhere and arranging direct debits”.

According to uSwitch, debt levels reached a record high of £1,268 billion last year.