Beware of Loan Applications on Finance Comparison Sites

The temptation on a Money Comparison website is to always apply for the lowest APR loans. However if you don’t have a very good credit history, this could make it worse.

Such low interest rates are normally only for people with a proven record of maintaining credit and loan repayments.

The hidden danger is that if you have a poor credit rating or have been refused in the past, you have a greater chance of having your loan declined. The lender will perform a credit search on you which leaves a ‘footprint‘ on your credit file. Everytime you apply for credit, whether sucessfully or not, it is recorded by the credit reference agencies.

Multiple searches recorded against your name may affect your chances of obtaining credit in the future. This is a vicious circle that can be hard to break out from.

If you have been declined for a loan and are in need of debt consolidation to reduce outgoings and to simplify your finances, then call us for specialist advice.

Debt Managenemt saves money over a Debt Consolidation Loan
Currently, typically Sub Prime lenders are offering unsecured loans of upto £20,000 at £15.2% APR.
So to consolidate £20,000 into one loan over 10 years means paying back £325.12 per month for 120 months - a total of £39,014.86.

In other words  - you’re doubling your debt overnight.

On a debt management programme, the debt management company typically charge 17.625% of money paid as their fee. So it would cost:-

£20,000/120 months * ( 1/ (1 - 0.17625)) = approx £200 per month, £24,000 in total to pay back the £20,000 debt.

That makes a saving of about £15,000 by taking the debt management route.

Note: This presumes the creditors freeze all interest at the start of the debt management programme. Most will, but this is not something we can promise.

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