I have four credit cards and a personal loan in UAE, where I have a few outstanding payments. Can you advise me how I can consolidate my payments? What are my options in the market?

Well, I would say, consolidation is the right approach towards reducing the fiscal obligation, as it helps to ease ballooning financial debt worries, by grouping all pending payments into one combined loan. But, before looking into the consolidation option, you need to ensure the deal you are getting into is really workable than the situation you are at present. Since consolidation of payments seems good option but it requires strict financial approach to maintain the balance and should not end up with more debt.

However, if you speak about options, then certainly now in Dubai, many financial institution are marketing competitive products with different names like refinance, loan consolidation, liability settlement and so on, which all aims to merge different payments and loans in one single loan option. This product offer attractive interest rates, which promises lower monthly payment over the term of the loan. But then there are some factors which need to be considered, while approaching creditor- how much loan you actually need to consolidate all your payment, are you ready to transfer your salary, check how much difference comes, in interest rate with or without salary transfer. And most important, check if you pay off your debt consolidation loan early, will there be any penalties for doing this. Don’t hesitate to ask the complete inclusive fee with your creditor.

And lastly I would put, if you have outstanding payments, and already you have stretched yourself to meet the financial requirements, then it’s the right time to start shopping for consolidation option and thereafter prudently, keep a check on your spending to avoid any forfeits.

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Answered by Dhiren Gupta, Managing Director 4C Mortgage Consultancy for Friday Magazine Reader