uSwitch comments on consolidation loans
Consumers who take out a consolidation loan in order help themselves pay off debt should take care over the process, uSwitch said today.
According to research from the price comparison website, 23 per cent of people who take out such a loan do not close existing debts - and continue being charged interest on them.
In turn, this leads this group to borrow over £2,200 extra on average - mainly due to these extra payments.
Personal finance expert at uSwitch, Mike Naylor, said that consumers should always be made aware of the advisability of closing the extra debts by the consolidation loan provider - which does not always happen.
"The potential [lenders'] profits have clearly been too good to resist," he said.
In its study, conducted by pollsters YouGov, uSwitch also found that around 1.3 million consolidation loans were issued in the UK last year.
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