This is one of the most common question about loans. You should never aim just to consolidate – it’s often a disaster waiting to happen. If you’ve a lot of small loans or credit card debts, the primary aim should be to pay them as quickly as you can at the lowest possible rate.
Don’t be suckered in by the promise that a consolidation loan can save you money by reducing your outgoings to a “manageable” level using just “one single monthly payment”.
They can – but the way they do this is by stretching your borrowing over a longer period, maybe 15, 20 or even 25 years. That means the amount you pay back is going to be huge, as you’re paying interest for much longer.
A £10,000 loan on a high street credit card at a horrid 18% APR costs £5,240 in interest if paid off within five