Using a personal loan to consolidate 'could be a good idea'
Published On 1 November 2007
Using a personal loan to consolidate existing credit card borrowing and other debts can be a good idea, an industry expert has said.Steven Baillie, head of loans at Sainsbury's Bank, explained that people generally took out personal loans for three purposes: to finance a car purchase, clear debts or pay for home improvements.
He added: "Debt consolidation is number one at the moment. But that's not a bad thing, if you look at it. Customers are sorting themselves out."
Mr Baillie said that there was "no doubt" that personal loans could be the best way for some consumers to sort out their existing debt problems.
"It comes back down to doing your homework, understanding that you're getting the best rate, understanding all the clauses, the small print et cetera, so there are no hidden charges," he said.
"It's back down to using a personal loan for the purpose it's devised, which might be settling off all your credit cards and you're saying: 'Right, let's get a grip of all my spending'.
"You may say that it's manageable in the small term - I can pay it off over five or seven years et cetera."
Figures from Credit Action indicate that consumer debt in the UK reached £1.38 trillion by the end of September.
