Halifax has said that more than half of the people who take out an unsecured loan with them do so to consolidate their debts. The company says that according to their records, 54% of unsecured loans are taken out to pay off other debts. Very often consumers prefer to consolidate their debts this way because it means they can take high interest debts such as store cards, and pay them off with the loan at a lower rate of interest.

It seems that Halifax unsecured loans have a lot to recommend them, for a start, you don’t have to make any repayments for the first three months and then you can take the loan out for a period of between one and seven years. The breathing space is good because it gives you some extra finance for a while should you need for other, essential expenses. The Halifax unsecured loan is paid back via fixed monthly payments which makes it much easier for people to manage their budget and loans are offered at a fixed rate that is designed to suit personal circumstances. For loans in excess of £7,000 the typical APR is 8.9%.
 

It is small wonder that debt consolidation is the most popular use for Halifax unsecured loans. People who are at present paying interest of 17.0% or more on debts with two credit card companies can drastically reduce their overall repayments and enjoy the ease of making only one payment rather than two or three. Some studies suggest that taking out an unsecured personal loan carries a social stigma and so many people who do take out such a loan do so in secret. Nowadays the most common reason for people taking out unsecured personal loans is to pay off other debts. 54% of loans taken out in this way were for debts under £3,000 but five percent of unsecured loans are taken out to pay off debts totalling more than £20,000.

The Consumer Credit Counselling Service says that people who take out unsecured loans and conceal the fact from friend and family are actually causing themselves more stress. The Service advises people to be open about their debt and the means by which they intend to repay it. The research that this information is based on came about after the Halifax reported that most people tend to take out unsecured personal loans in January, because many people determine to get their financial affairs in order at this time of year.

Although debt consolidation may be a good option for some people, you should always seek financial advice from an organisation like the Consumer Credit Counselling Service as they may be able to help you find a better way of doing this.