Debt Consolidation

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Debt consolidation loans let you combine your existing debts into one manageable monthly payment. Find out more, compare your options and check your eligibility.

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Finding the best debt consolidation loan for you

By Matt Fernell, Editor-in-Chief at

Matt Fernell

Debt consolidation loans can be a helpful way to manage your existing debts. Find out all you need to know about finding a debt consolidation loan that works for you.

How to find the right debt consolidation loan

Debt consolidation loans are a way of combining all your existing debts in one place. Rather than having several separate payments at high rates, you can consolidate everything into one repayment at a lower rate of interest. Here’s everything you need to know about how debt consolidation loans work. 

Here are a few things you need to think about to help you find the best possible debt consolidation loan.

Work out how much you need

When applying for a debt consolidation loan, you need to understand how much you need to borrow in order to clear your existing debts. 

To do this, add up all of your current borrowing. You don’t have to consolidate all of your debt, but make sure you prioritise your most expensive borrowing. 

We can help you find an unsecured loan up to £50,000. If you need more than this to clear all your debt, you could borrow more using a secured loan.  

Understand how much your debt costs

The main reason to consolidate debt is to reduce the cost of your repayments. You can only do this by getting a debt consolidation loan with a lower interest rate than your existing debt. 

Chances are, if you’re looking to consolidate your debts, you have expensive borrowing. However, it is worth working out what you are currently paying for the loans and credit cards you want to clear to ensure your new loan is at a lower rate.

Consider all your options

Debt consolidation loans can be a great way to get your debt under control; however, they are not suitable for everyone. Before applying, make sure you:

  • Weigh up the pros and cons of debt consolidation loans to make sure they suit your circumstances

  • Explore all of the alternatives to make sure there isn’t an option that suits you better

  • Shop around to find the best deal - we can check your eligibility and find you quotes

How we can find you the right debt consolidation loan

To help you find the right debt consolidation loan, we can check your eligibility with a range of lenders in just a few minutes without impacting your credit history. To find the best loans for you, we’ll ask you some quick questions about your:

  • Loan

  • Personal details

  • Contact information

  • Employment

  • Finances

We can then let you know your eligibility within minutes, even if you have a poor credit history. We can find loans from £1,000 to £50,000 that you can use to clear your debts.

What are the advantages and disadvantages of debt consolidation loans?

When considering a debt consolidation loan, it’s worth weighing up the pros and cons to see if it’s the best option for you.

Advantages of debt consolidation

  • Lower repayments - when you take out a debt consolidation loan, you might be able to fix repayments over a longer period, which could significantly lower the amount you pay each month.

  • Easier to manage - Having one fixed monthly repayment will help you manage your finances. Knowing how much you need to pay and when you will have paid it off can also bring you peace of mind.

  • Potential savings on interest - If you currently have multiple high-interest debts, consolidating the amount you owe into one lower-interest loan could save you money by paying less interest.

Disadvantages of debt consolidation

  • Could take longer to repay - Fixed monthly payments could mean you spend longer paying off your debts.

  • Additional fees - Some debt consolidation loans will charge additional fees, such as setup charges. In some cases, this could cancel out any savings you make by having a lower interest rate.

  • Could lose your home - Missing repayments could damage your credit score, and if you’ve used a secured loan to consolidate debt, you could potentially lose your home or any other asset you used to secure the debt.

Alternatives to debt consolidation loans

Before you decide to apply for a debt consolidation loan, it’s worth considering the alternatives to see if they could be a better option for you. 

  • 0% balance transfer credit card - this type of credit card allows you to move any existing credit card debt onto a new card that won’t charge interest for a set period. There might be a small fee to pay to make the transfer, and this option is only available for credit card debt.

  • 0% money transfer credit cards - these allow you to transfer money from a credit card to your bank account with no interest to pay for several months. The transfer also comes with a fee, but you can use the money to pay off your overdraft or any loans.

  • Savings - if you have money saved up, use this first to clear your most expensive debts. The interest you're paying on debt will likely be higher than what you’re earning on your savings, so it’s worth clearing as much of your debts as possible.

The information provided does not constitute financial advice, it’s always important to do your own research to ensure a financial product is right for your circumstances. If you’re unsure you should contact an independent financial advisor.

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Frequently asked questions

Can I get a mortgage after debt consolidation?

In most cases, it’s definitely possible to get approved for a mortgage after paying off a debt consolidation loan. In fact, showing that you are a reliable borrower by making all of your regular payments could help your chances of securing credit in the future.

Do I need to pay off my debts with a debt consolidation loan?

You do not have to pay off all of your debts with a consolidation loan, however it’s a good idea to use the loan to pay off as many debts as possible. One of the biggest benefits of debt consolidation is that you’re only making repayments to one lender, rather than multiple, making your debts more manageable.

Can I get a debt consolidation loan for bad credit?

You can get a debt consolidation loan if you have bad credit; however, you might find you have fewer options and might have to pay a higher interest rate.

Using a secured debt consolidation loan could be a good option, as they can be easier to get if you have a poor credit record. By using your home as security, lenders will be more willing to give you a loan as the risk to them is reduced.

However, remember that using a secured loan means your home will be at risk of repossession if you cannot keep up with your repayments.

How much does a debt consolidation loan cost?

Debt consolidation loans are tailored to your personal circumstances. The overall cost of a consolidation loan can vary depending on several factors, including:

  • How much you need to borrow - The amount you need to borrow will depend on how much existing debt you have.
  • Loan term - How long you need to pay off the loan; this will depend on how much you borrow and how much you can afford to pay each month.
  • Annual percentage rate (APR) and additional fees - How much interest you’ll pay on top of the amount borrowed; this can vary between lenders and will be impacted by your credit history. Lenders may also charge additional fees such as an annual fee, arrangement fee or early repayment charge.
What can I use a debt consolidation loan for?

You can use a debt consolidation loan to pay back almost all types of debt, such as:

  • Credit Cards
  • Personal Loans
  • Overdrafts
  • Store Cards/ Payment Plans

Some types of debt such as mortgages cannot be repaid using debt consolidation loans.