Debt Consolidation Loans: 5 Reasons You Should Turn to Social Lending

Almost every facet of modern life involves debt in some way. Whether you want to buy a house, a new car or your weekly groceries, it is always possible to pay with credit – and in some cases, essential. Of course, debt is simply a fact of life for most people, but it has the potential to ruin lives if it is allowed to spiral out of control.

If you have gradually amassed a mountain of debt with several different providers, it may be time to think about debt consolidation. You can commit to one, much lower interest rate for your total debt, and the monthly administration involved in managing it will be greatly reduced. But instead of turning to a mainstream bank, taking out a peer-to-peer loan – essentially borrowing money from savvy savers looking for a better rate of return – may be a quicker, cheaper and more flexible solution. Here’s why:

1. Fixed Interest Rates

Most consumer debt in the UK is held on credit cards, which often offer attractive introductory rates as a way of luring you to them. In most cases, however, these rates rise steeply after the initial offer period expires. This can leave you uncertain about how much your debt repayments will be in the future. But that isn’t the case when you opt for a peer-to-peer loan. These flexible and affordable finance options provide you with a rate of interest that will remain the same until your loan is repaid.

2. Fixed Loan Terms

If you’re currently saddled with credit card debt, you may be finding it a struggle to see the light at the end of the tunnel. Credit card companies allow their customers to pay a minimum monthly amount, which can lead to debt spiralling out of control. But a peer-to-peer loan gives you an element of certainty over your financial affairs. Not only will you be able to budget on a monthly basis with absolute certainty, you will also be able to foresee exactly when you will be free from debt. With one loan from a peer-to-peer platform, you can pay off all your credit cards and store cards, and look forward to a more predictable and secure financial future.

3. Lower Interest Rates

Peer-to-peer platforms offer interest rates as low as 5 percent to people with a good credit history. In contrast, credit card companies and retail stores often apply rates of up to 40 percent. Loans from peer-to-peer platforms are often much cheaper than those being offered by high street banks, so paying off all forms of your unsecured debt with one has the potential to save you a huge amount of money in interest charges. That means more money in your pocket at the end of every month.

4. Less Administration

Even if you can afford your current debt levels, the time and effort required to ensure everything gets paid on time has the potential to cause you a great deal of stress and worry. However, peer-to-peer platforms can often have the money you need in your bank within 48 hours. You can pay off all your existing debt, and deal with just one creditor instead.

5. Flexibility

Unlike more traditional secured and unsecured loans, peer-to-peer loans allow you to pay off some or all of your debt at any time, without incurring additional penalties for doing so. And if you are late with a payment, the charges administered by a peer-to-peer platform are usually far less than those charged by credit card companies. Peer-to-peer lending allows you to take control of your debt – instead of it controlling you.

Every way you look at it, this method of borrowing is a highly effective way of consolidating your debt. Affordable, flexible and fair, it can simplify your path to a more financial secure life. Instead of struggling to keep pace with spiralling levels of debt with several different creditors, put your trust in a peer-to-peer platform.

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