Seek expert advice when thinking about debt consolidation

Coping with debt is never easy, but given the current climate things have become even more difficult for people who were already struggling. Aside from the fact that the general economic climate means many people face unemployment, the difficulty in getting credit means those who once relied on refinancing their debts face even greater difficulties.

A recent study by Sainsbury’s Finance revealed just how much the cost of borrowing has increased in recent years. It found that there has been a 16.74 per cent increase in the average interest rate charged on personal loans of £5,000 over the last two years. Between September 2008 and September 2010, the cost of such loans rose from 10.67 per cent APR to 12.45 per cent APR.

Steven Baillie, head of loans, Sainsbury’s Finance, said: “Our analysis highlights the great fluctuation in the personal loans market and the importance of shopping around.”

Sadly though, for some people shopping around isn’t always an option. As well as getting more expensive, loans are now harder to come by and sometimes the people who are in the greatest need of refinancing are the ones who have most trouble in securing the cash they need to change their personal circumstances.

However, there are a range of other options available to people and it’s always worth talking to a debt consolidation expert in order to find out what are the best steps to take to tackle the issue before it gets totally out of hand.

Debt payment plans and individual voluntary arrangements (IVAs) are also potential options, but the thing to remember is that no two cases are the same – it’s vital people struggling to make payments get expert debt management advice to ensure they don’t end up making the wrong choice. Although cash problems can often feel insurmountable, especially in the current economic climate, the right advice can often make things substantially better.