Debt consolidation loans to reduce pay-off time

FRIDAY, JUNE 02, 2006

New research has revealed that the average person with debt problems owes as much as £13,153.

According to a study carried out by the Citizens Advice Bureau (CAB), large debt is becoming an increasing burden for many and the group suggests that it would take a person literally a lifetime to pay it off at a comfortable rate. The CAB claims that the average amount of debt among those in financial difficulty would take 77 years to pay off, meaning that most people are in an untenable position.

As such, the number of people choosing debt consolidation loans over the months ahead could substantially increase as people look to solve their debt crises without having to resort to drastic measures such as filing for bankruptcy. By transferring to a debt consolidation loan, those in debt difficulty can pay off their outstanding debts and instead have just one easy-to-manage debt to pay off at a low rate of interest.

The research from the CAB reveals that the average amount owed by those in debt is up by almost a third compared to the previous year. It also represents 17 and a half times the average monthly income of a person in debt, highlighting the fact that the amount of debt in which people find themselves has increased in recent years.
Investing in debt consolidation loans may become more attractive as the amount of money owed by the average person turning to the CAB for help has gone up. The increase suggests that people are waiting longer before turning to organisations such as the CAB for help, but instead of waiting so long more people should consider debt consolidation loans before their debt levels are too high.

By taking out a debt consolidation loan as soon as the imbalance between outgoings and income becomes apparent, consumers could tackle their debt problem quickly and effectively through debt consolidation loans rather than facing a lifetime of debt.
For such an approach, the CAB believes that more needs to be done to educate people about their finances and the options available to them to keep their financial situation under control. The CAB's chief executive David Harker explained: "Low income, combined with badly informed and poorly understood financial decisions are at the root of many of our clients' debt problems."

Mr Harker added: "They need to be given some hope that they can turn things around, with a solution that offers them a fresh start, lifts them out of the poverty trap, and gives them a chance to build better financial skills for the future."