The Debt Consolidation Loan Rip Off

Have you ever considered why people who tend to have poor credit history tend to have to pay higher interest rates than those with good credit ratings? Surely if these people cannot afford to pay off their current loans, why should they be penalised by having to pay MORE interest? It seems to defy logic doesn't it?
So you might be wondering, "Should i consolidate my debts in order to make them more affordable?" Well consider this. Perhaps taking out a secured loan may reduce your monthly payments, however if you are borrowing the same money at a lower rate of interest over a longer period of time, in the long run you could actually be paying a lot more interest!

Take the following example.

Mr A owes £10,000 on his credit cards.
If he were to take two years to pay this off at 15% APR he will pay a total of £3000 interest over two years.

If however he decides to consolidate his debts into a Secured Debt Consolidation Loan which charges 10% interest, over 5 years he will pay a total of £5000 interest over 5 years.

The moral of the story, be careful when considering financing debts with more debt.