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Once the festivities of Christmas have finally passed and the last of the turkey has eventually been eaten, many individuals wake up at the beginning of January with a double hangover, one from the excess of drink, the other one when they receive their bank statements and credit card bills and realise just how much money they actually spent on Christmas.

At the same time, many people find that the start of the New Year is an ideal time to review their financial situation and perhaps tidy up their existing personal loans and other debts.

Not surprisingly then January is usually the busiest time of the year for people applying for debt consolidation loans, as a large number of borrowers consolidate all their existing personal loans, credit cards and overdrafts into one new loan with a single monthly repayment.

This is not only easier to manage for many people, but can also save a huge amount of money in additional interest payments over the term of the loan. However, someone who may be considering this option must be careful to check the rate of the new loan against those charged on their existing loans and cards, it would make little sense to switch to a loan with a higher interest rate than they are currently paying. 

Also it is important to remember that if the total term of the debt consolidation loan is longer than that of the original debts, the total repayment amount could be significantly higher, despite lower monthly repayments, due to interest being charged over a longer period.

This year however, due to the restrictions many banks are placing on new lending caused by the credit crunch, a larger percentage than normal of those people applying for a debt consolidation loan are being turned down for the credit they need to cover their existing loans, despite having a reasonably clean financial record and many borrowers are likely to have to struggle on with their existing arrangements this year, or at least until the banks start offering loans once more.