Debt consolidation loans: £3 billion by Easter

The first three months of 2009 could see 250,000 debt consolidation loans taken out, with a total value of almost £2.93 billion, it has been has estimated.

According to Sainsbury’s Finance, nearly 25% of personal loans are taken out to consolidate debts. It expects about 18% of this year’s personal debt consolidation loans to be taken out in the first month of the year.

“Aside from reducing the interest rates they’re paying,” said a debt expert for Think Money, “debt consolidation can also give borrowers a chance to take a new look at their financial situation and calculate how quickly they can afford to repay their debt.

“Of course, repaying a debt more slowly will result in interest accumulating for longer, which may increase the overall cost of the debt. Nonetheless, debt consolidation can be a very useful tactic, giving people much better control of their debts.”

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