You get your paycheck and have your direct debits go out of your account pretty much on the same day. You don't pay your loans off by direct debit because you have to juggle what money you have left over to pay the minimum balance on your credit cards, HP and other loan commitments. Half way through the month, you are desperately short of money to buy the basics such as food or a bill comes through the post you weren't expecting and you suddenly have to go and raid your credit card or overdraft facility to find the money to get through the month.



The next paycheck comes around and you now have even less money to juggle with because you have to get the overdraft repaid or have an even higher credit card balance as you slowly lose ground in getting your debts and bills paid.

You may have even gone beyond this stage and now be actively dodging answering your telephone or are feeling nervous when someone knocks on your door because you have missed some payments and now, you have collection agents chasing you and you don't like opening the mail because they are covered in red ink.

Before it gets to the stage where you are being taken to court or the bailiffs are threatening to pay a visit to take your belongings away, you ought to consider a consolidation loan.

A consolidation loan will allow you to bring all of your credit cards and loans into one lump sum loan with one monthly repayment. Rather than paying a multitude of different credit companies and lenders, the sum total of which can be very significant, you can arrange a new monthly repayment which suits your budget.

There are no solicitors or legal fees involved; it is simply a case of find a lender with loan deals which are suitable for you and make an application. Once the loan is approved, pay off your existing loans, and in many instances the consolidation loan company will do this for you directly from the loan proceeds. By clearing your outstanding credit, you save yourself a significant lump sum each month for your budget but you also will help save your credit rating because rather than being taken to court or defaulting on repayment, you have paid all these existing lenders their money back – that always looks good on a credit report!

The downside of consolidation loans is that in order to give you a lower monthly repayment, you have to take the loan over a longer repayment period than your existing debts have been scheduled for. This said, a consolidation loan is typically a lot cheaper than the interest rates being charged on your outstanding credit card balances. Make sure you shop around and compare the consolidation loan deals which are available before you make an application, but be careful you do not leave the application so late that your existing credit lenders start making adverse reports on your credit file.