If you are thinking of using flexible loans to consolidate debts then you have a couple of things to consider. Although you could be paying less than the sum of your present debts with your monthly repayments, you will be paying for a much longer time. You could also find that having just one creditor will reduce the pressure you may have been under from your present creditors. Even though you may have to pay early settlement charges to your creditors when you pay off your debts you could save a lot of money, especially if you use a secured, low interest loan. It will also help you to bring your debt under one roof and work towards lowering your debt in the future. It is vital that you make sure that you can afford the repayments before you take out a debt consolidation loan.



The main categories for flexible loans are secured and unsecured loans. Unsecured loans do not require the borrower to provide the lender with any security to back the loan and this added risk to the lending company results in higher interest rates. There is less risk for the borrower but if they fail to pay back the loan the lender could take them to court. In the case of secured loans, of which a mortgage is a prime example, the borrower provides the lender with collateral, their property. This is low risk for the lending company because they always have the property as insurance if the borrower defaults on repayments and fails to repay the loan. The borrower is risking their home and this why it is so important that you make sure that you can afford the repayments on a loan before committing to an agreement. Secured flexible loans are usually approved faster than unsecured loans but can take longer to process.

Flexible loans are repayable on a monthly basis and you will be charged interest by the lending company. This is called the Annual Percentage Rate or APR and the exact amount you are charged will be determined by the amount you borrow, the repayment term and the lender's view of your ability to pay back the loan as agreed. This is where your credit history, the equity in your property and your circumstances are considered. The typical rates advertised by lenders are only an indication of the APR you are likely to get but not a guarantee.

Depending on the loan company, you could be given the flexibility to make over-payments and to pay in lump-sums with flexible loans. This will allow you to clear the debt over a shorter period than agreed at the outset and can potentially save you a substantial amount of money. You may even be able to withdraw amounts from the loan account, providing you stay within you credit limit. A further option is payment breaks which will allow you to take a break from you monthly repayments at the beginning or during the term of the loan. An adjustment will be made to your monthly repayments to include any accrued interest so that you still pay off the debt in the term agreed.