When you are looking for an easy way to minimise and reduce the number of payments going out each month you might consider the option of a debt consolidation loan.Many companies claim that debt consolidation can give you a new start because it permits you to consolidate all your debt into one monthly payment, usually secured against your property.If you’re fortunate enough to be a homeowner, this route can work, and some consolidation loans are also available to tenants.

It’s certainly often the case that the combined interest rates on all the individual loans or credit agreements you have will usually be higher than the rate on a single debt consolidation loan.Paying off all of the debt you have been juggling for years with a debt consolidation loan and maintaining payments against this one large loan may also help to improve your credit score.

Debt consolidation loans do have certain drawbacks though.A consolidation loan with a relatively low interest rate will be easier to get if you have previously paid your debts on time and in full and do not have any substantial arrears on your mortgage, personal loans or any credit cards. If you are in the position of juggling your finances to accommodate debt due to redundancy or sudden loss of income you may well have missed several payments or be in arrears with some lenders and your credit score will reflect this.Consolidation loans at an attractive rate of interest may prove difficult to get.If you are in negative equity, there may not be sufficient capital “locked up” in your home to get the size and amount of loan you need to cover all your outstanding debt. 
The debt consolidation loan will have to be sufficient to redeem all your existing loans and agreements, so you will be paying the full the amounts outstanding plus any interest as well as PPI sums that may be added to the total. The consolidation loan will involve you in new rates and charges going forward.

If your debt is largely in credit cards or unsecured personal loans, then consider challenging and reducing that debt entirely.Key changes to the Consumer Credit Act 1974 means that the entire outstanding balance on some credit cards and unsecured loans issued before 6th April 2007 could be challenged through a legal process.The ability to challenge a regulated agreement on the basis of its non compliance within the strict requirements of the Act has proven to be a winning strategy for Credit issues, with several successful court cases already in the bag.No matter whom the credit card or unsecured loan provider is, so long as the balance you owe is over £2,000 Credit Issues can successfully challenge the debt and investigate possible reimbursement for any mis-sold Payment Protection Insurance together with interest.

So, while a consolidation loan may be an option to consider, before you commit to paying every penny of interest and charges on your debt and get involved with more charges, fees and interest payments on a continuing basis, find out if you could clear your debt in the first place and reduce you outgoings to the point where you don’t need yet another loan at all.