Debt consolidation loans can be ‘welcome lifeline’

Debt consolidation loan borrowers should ensure they do not accrue extra debts, according to new research.

Figures released by the Motley Fool indicate that about three out of five loan consolidation customers go on to borrow further

Head of personal finance David Kuo said: "Consolidation loans can be a welcome lifeline for people caught in financial difficulties. But the lifeline can quickly turn into a noose if you submit to the temptation of running up further debts."

As a result, he claimed it was "vital" for borrowers to use consolidation loans wisely.
The study also showed that the average consolidation loan is about £16,500 and takes eight years to pay off.

Mr Kuo added that those with a number of debts to pay at the same time should make repayments on those "with the highest rate of interest first, while making minimum payments on other loans".

Earlier this year, Helen Saxon from the Finance and Leasing Association claimed that debt consolidation loans can a "positive step" for those looking to manage their finances.

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