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Personal loans "much better option" for debt consolidation

05/02/2008

Personal loans are a "much, much better option" than secured loans for debt consolidation, according to an industry expert.

The unsecured nature of a personal loan means that the home of the consumer is not at risk and, with lower rates, debt problems are unlikely to be made worse by taking out a personal loan for debt consolidation, Moneywise stated.

However, consumers should cut down on all unnecessary spending to avoid making the debt problems worse, Rachel Lacey, editor of the publication, said.

Ms Lacey added: "It`s no good consolidating all your credit cards and all your existing loans onto one personal loan just to carry on borrowing and using your overdraft and taking out another credit card."

According to uSwitch, across the UK, consumers are paying £93 billion in interest on loans, credit cards, overdrafts and mortgages.

More than 4 million fear they`ll be made redundant 16/12/2010 - According to R3`s quarterly personal debt tracker, more than 4 Consumers took on more mortgage debt in July 26/08/2010 - Consumers took on £2bn more mortgage debt than they repaid Debts called in by parents 26/08/2010 - According to research, `the bank of Mum and Dad` is Teenagers `scared of debt` 19/08/2010 - Nearly two thirds of teenagers are `scared` of debt, according