Recently, there has been an increase in the number of policies aimed at "helping you consolidate all your debt into one easy manageable payment." Sounds great, but what’s the catch?

Many of these lenders target what they call "credit-impaired" people, who find it difficult to get a loan from high street banks due to a poor credit record. They charge for this risk by charging very high interest.

Many people feel that once they’ve grouped all their payments into one, they will be fine. Theoretically speaking, one monthly payment should be easier to pay than 10, and the total interest should also be lower. However many people who have taken a loan out in this way to pay for existing loans have only sunk in deeper. It is worth remembering that the companies offering them are not just doing it because they want to be nice and helpful. For them, it is a commercial venture, and they are out to make money. In most cases, the loan they offer will be house secured, making it more dangerous to miss payments.

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This web-site was last updated on 02/10/2009

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