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Do consolidation loans really work?

There are many people in the UK who have seen their debts spiral out of control over the last few years and there are many who have personal loans, mortgages, credit cards and potentially overdrafts as well. The minimum payments on individual debts can cause major problems for monthly household budgets and as a consequence there is renewed interest in consolidation loans. But do consolidation loans really work?

Before you even consider a consolidation loan you should be aware that your debts will be amalgamated and refinanced on a longer-term basis. If you're in financial difficulties there is every chance that you may have to accept a higher than average interest rate on your debts and will therefore be paying back significantly more in capital and interest payments. However, for some people the ability to reduce their monthly payments and also spread these across a longer period could be something of a godsend.

If you do look towards a consolidation loan then you must abide by a strict budget to ensure you keep up with your payments and do not put your longer-term financial security at risk. If you have significant debts then there is no escaping the fact that you need to change your spending habits and live within your means.

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