Any recommendations on how to consolidate loans most effectively? We have three at present, one with the Halifax, one with the Woolwich, and one with Norwich Union. I'm considerating taking out a new loan to pay off the others and at a better repayment rate (more affordable!) but has anyone got any tips on what I should look out for such as fees and good companies to work with? I think this is a great forum and thanks for your helpful comments already!

Hi Janine,

To start I'd definately do some research using a tool such as moneysupermarket.com... there are others too so make use of them to compare loans.

We were in a similar situation recently with loans and credit to clear of approx £25K. We had to find a way to sort out our repayments without them getting much bigger payment wise and giving us a bit of breathing room.

In the end we plumped for taking a flexible mortgage rather than a loan. In the long run we'd pay far more interest if we were to pay it over the 22yrs but with taking the flexible mortgage we can pay off the excess when we hvae a bit of spare cash that will over time help to reduce the mortgage and interest payments.

ALthough this option was right for us at the time there are a large number of loan vendors out there these days. I think the only one I tend to avoid is Banks (or the majority of them) as their interest rates are too high. Companies I have used in the past that have been great with good interest rates have been Tesco, Sainsburys and Northern Rock.

Good luck on your search!

Corty

The problem is however, what do you do if you don't own any house or property etc? Banks are a lot less likely to consolidate (obviously)

Well, you could always buy property.

Seriously, depending on the ammount you owe it may be possible to roll it over into a no interest credit card for the life of transfers - then don't use the card for any new purchases. Allow the credit card company to pay off the interest for you.

There are alot of companies out there who's sole purpose is to help people dig out of debt.

You could go with one of these (just type debt consolidation in your search engine) or you could call your lenders personally and ask to speak to a manager. Tell them you are working to pay down your debt and can they work with you to lower your payments or interest. Sometimes that's all it takes.

Make sure that you stay current on your payments and people will be more willing to work with you.

Beware of some debt consolidation companies. They may get a settlement for you and you may pay less or even find a reduction in your principle, but it can affect (in a very negative way) your credit score.

Wll, you could go with a second mortgage against your homw or a signature loan from the bank. I personally would stay away from debt companies.

Would consolidating really help you all that much? Could you just pay extra on your lowest loan until its paid off and then move that amount to paying extra on your next loan and so on. That way you save in all the hidden fees that tend to pop up PLUS you are that much closer to being debt free.

Do you really need to consolidate? Could you just pay a little extra on the smallest loan until its paid off and then move that payment to the next loan and so on? This has the benefit of NOT requiring any more fees AND not requiring any collateral PLUS you will soon find yourself debt free.

Oh, come on Kelkat - that's too easy.

Good advice - not universally followed.

Pay off early? Sounds good.