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Personal loans 'top' for debt consolidation

Anyone thinking about taking out a debt consolidation loan should opt for a personal loan over a secured loan, according to one industry insider.

Rachel Lacey, editor of Moneywise, said that when consolidating existing debts it is best to avoid securing a loan on a property as it could be at risk if repayments are missed.

"A personal loan won't be secured to your house," she said. "If you're looking at debt consolidation, what you really, really don't want to look at is a secured or homeowner loan, because if you don't keep repayments up then your home is at risk."

Recent figures from uSwitch revealed that of the three million people with a consolidation loan, 65 per cent did not close down other credit forms and ended up taking on even more debt.

Ms Lacey added a warning over borrowing further if a consumer has taken out a loan to consolidate existing debt, saying it is "no good" to carry on borrowing once someone has consolidated.

See how much you could borrow with an unsecured loan from Lombard Direct

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04/02/2008 16:20:38

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