Yes, consolidation loans for bad credit are available. A debt consolidation loan lets you pay off existing debts by transferring them all to a single loan. By doing this, you’d make just one monthly repayment instead of several to different lenders.
When you apply for debt consolidation loans for bad credit, most lenders will check your credit record. The good news is that with consolidation loans, bad credit isn’t always a deal clincher. Some lenders are still willing to offer you a bad credit consolidation loan, even if you’ve had financial problems in the past.
But, with some consolidation loans, bad credit means you’ll have to pay higher interest rates. It could also mean that you’re not able to borrow as much.
How to get the best debt consolidation loan
The best consolidation loans for bad credit let you pay off your existing borrowing for the lowest cost. They’ll also offer affordable monthly payments.
Here’s how to go about finding the best bad debt loans:
1. Work out how much you owe
Before you look for a bad credit consolidation loan, you need to check if there are any fees if you pay back your existing debts early. You’ll also need to work out the total of your existing debts. Bad credit consolidation loans can usually combine your debts from loans, overdrafts and credit cards.
2. Work out how much you can afford to pay each month
If you’re looking at debt consolidation loans for bad credit, you should draw up a budget to see how much you can afford to repay every month. It’s even more important to do this if you have bad credit, because you need to avoid further damage to your credit record.
3. Think about whether you want a secured loan or an unsecured loan.
With consolidation loans, bad credit isn’t always a problem. You’re more likely to be accepted for a secured loan and you might be able to borrow more. But when you’re looking at debt consolidation loans for bad credit. unsecured loans are the best option as long as you can find one that meets your needs and that’ll accept you. A secured loan is linked to something you own – usually your home. If you can’t pay the loan back, your home’s at risk because the lender could force you to sell it to get their money back. In contrast, unsecured loans aren’t secured against your belongings.
4. Compare rates for loans that fit your criteria.
When you start looking for consolidation loans for bad credit, you should try to find the lowest rate possible. Ideally, you’ll want to borrow over the shortest time you can while keeping your monthly payments affordable.
You can use this comparison to search for bad credit debt consolidation loans from regulated lenders.
If you’re looking at credit card consolidation, then a balance transfer to a loan to pay off debt could be another option worth considering.
Can I get a bad credit debt consolidation loan with no guarantor?
Are you looking for a debt consolidation loan? Bad credit? No guarantor? You could still be in luck. You don’t always need a guarantor for consolidation loans for bad credit.
But if you’re struggling to find a bad credit consolidation loan that works for you, you could think about finding a guarantor. Your guarantor would have to say they’d take responsibility for making your repayments if you couldn’t. This would make lenders more likely to give you a bad credit consolidation loan.
Is consolidating debts a good idea?
It depends. Loans to pay off debt are a good idea if the payments are affordable, the loan has a lower interest rate, and it won’t take you much longer to pay off your debts.
With a debt consolidation loan, bad credit won’t always affect your eligibility. So it can be a good way to help you manage your money if the loan meets the criteria listed above.
Find out more about whether you should consolidate your debts.
What alternatives are there to consolidation loans for bad credit?
Consolidation loans for bad credit are sometimes a good option. But there are alternatives if a bad credit consolidation loan won’t work for you or if you can’t get accepted for one.
You could think about getting a 0% balance transfer credit card. You could still consolidate your debts, and it’d give you around 6-12 months interest-free.
Alternatively, you could consider a second charge mortgage if you’re a homeowner. Although this would put the equity in your home at risk
If you feel your debts are becoming unmanageable, talk to your lenders as early as possible. You might be able to negotiate lower payments over a longer period of time.
There are also various debt charities that you can speak to for support. They might be able to help you devise a debt management plan.