Ask the expert: I need to consolidate my payments

I have four credit cards and a personal loan in the UAE, with a few outstanding payments. How can I consolidate my payments, and what are my options for that?

Consolidation is the right approach towards reducing fiscal obligations. And it benefits by easing ballooning financial debt worries by grouping all pending payments into one collective loan. Nonetheless, before opting for consolidation, you need to ensure the deal you are getting into is feasible, and better than the present situation you’re in.

While consolidation might seem like a great option, it requires a strict financial approach to maintain the balance, or you could end up with more debt.

Regarding options, in Dubai there are now several financial institutions marketing competitive products with different names such as loan restructure, debt consolidation, liability settlement and so on, which all aim to merge different payments and loans into one single loan option. There’s attractive interest rates on offer, which promise a lower monthly payment over the term of the loan.

But there are some factors that you need to seriously consider before approaching creditors, such as how much loan amount is actually needed to consolidate all the payments, are you ready to transfer the salary, have you checked the difference in interest rates with or without salary transfer, etc.

Most importantly, check if there will be any penalties if you opt for an early loan repayment. Ask the creditor to provide you with the complete, inclusive fee before you make a decision.