RateSetter has described the benefits of a debt consolidation loan, such as reducing a borrower’s monthly payments.
A debt consolidation loan consolidates your existing loan into one loan, so that instead of paying monthly repayments for each of your debts, you pay one monthly payment to a loan provider.
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RateSetter said a debt consolidation loan gives the borrower more control over their finances with one monthly payment on the same date each month to the same lender.
The platform added that it should save borrowers money by paying off higher-interest credits, such as credit cards with a lower interest rate, based on the total cost of the loan. borrowing and costs related to the repayment of existing loans.
The consumer lender said a debt consolidation loan should allow a borrower to pay off debt sooner and lower their monthly payment.
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“By paying a lower interest rate through a debt consolidation loan, more of your money goes to paying back the amount you borrowed, rather than paying interest,” RateSetter said. in a blog on his website.
“So if you decide to continue paying the same monthly amount as your existing total monthly payments, you will pay off your debt faster. Paying off your debt faster means you may pay less interest overall, which will save you money.
“A lower interest rate on a debt consolidation loan could reduce your monthly repayments.
“You may be able to further reduce your monthly payment by spreading your repayments over a longer period. This can help make your monthly repayments more manageable.
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RateSetter added that by extending the term of the loan, the monthly payment can be reduced, but a borrower could then pay more interest in the long run.
The lender said a debt consolidation loan should also improve a borrower’s credit rating over time as they begin to repay the loan because they make regular, structured repayment. each month.