The Consolidation Loan: Not Just for Low-Income Earners
There are widespread myths involving just about every area of life. In the financial sector, a persistent myth we want to address in this blog post is the one that says the debt consolidation loan is mainly the domain of low-income earners. This is simply not true. Moreover, statistics suggest that more professionals in secure employment are taking advantage of debt consolidation to pay down their indebtedness. This is a trend we've been seeing now for several years.
Financial Reporter's Rozi Jones cited the growing trend of professionals borrowing on second charge products in an article published earlier this month. Jones made a note of the fact that just a few years ago, it was extremely rare for a professional with a good job to apply for a consolidation loan to pay down debt. But that is changing,
Second charge products for debt consolidation reached record levels in 2016. For our purposes, the more important thing to know is that professionals are not only taking out consolidation loans more frequently, but the size of their loans is increasing as well. In other words, professionals are borrowing more than ever before to consolidate their debts.
Debt Can Get Away from Anyone
Jones didn't offer any hard and fast numbers that would tell us exactly how much professionals are borrowing in second charge products. Still, it's not difficult to understand why this might be the case. With the gradually rebounding economy and more professional jobs available, those who hold such jobs seem more willing to spend. And the truth is that debt can get away from anyone, regardless of career choice. You don't have to be a low-income earner to find yourself living above your means.
We believe you can make the case that high-income earners might have a higher inclination to live above their means because they get used to spending at a certain level. Whether that is true really is irrelevant; it's just something to think about. What's most important is the reality that second charge products are available to anyone who wants to consolidate debt so as to eventually retire it.
Reasons to Consolidate Via Second Charge
We find it interesting that professionals are taking on more loans worth more money for debt consolidation. This suggests that their indebtedness is more than can be handled through personal loans and credit card balance transfers. It also leads to an opportunity to discuss reasons for consolidating via second charge products.
When you go second charge (think secured loan, here) you're choosing an option with several built-in benefits:
- second charge loans tend to come with lower interest rates than personal loans and credit cards;
- secured loans allow borrowers to borrow tens of thousands of pounds;
- it's easier to get a secured loan even if you have less-than-stellar credit; and
- consolidating debt with a secured loan usually results in a single payment at a lower monthly cost.
The key to getting a good consolidation loan is to shop around. If this is something that interests you, the first step of the process is to sit down and evaluate your needs. How much do you owe? How much can you realistically borrow based on the equity in your home? How much can you afford in monthly payments to repay your consolidation loan?
With a good idea of your needs, you can start shopping around for different options. There are enough competitive deals out there that you should be able to find something that works well for you.
Financial Reporter â?? http://www.financialreporter.co.uk/specialist-lending/professionals-choosing-second-charge-for-debt-consolidation.html
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