Organise and clear your debts with a debt consolidation loan. Designed to help you move multiple existing debts to one simple monthly repayment, our best debt consolidation loans could help you become debt-free quicker. Check out the table below to see interest rates and loan terms.
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Debt consolidation loans allow you to merge all your debts into a single loan by allowing you to borrow money to pay off all your existing debts. Once your debts are merged, you’re able to switch to just one monthly repayment to a single lender.
Debt consolidation loans can be used to pay off credit cards, store cards, overdrafts, buy-now pay later debt and other personal loans.
The goal of a consolidation loan is to simplify your repayments, as well as hopefully save you money on interest.
There are two principal types of debt consolidation loan - secured and unsecured.
The majority of debt consolidation loans are only available to homeowners, so they tend to be secured loans.
But unsecured consolidation loans do exist and can still save you money on your debts.
Unsecured consolidation loans are not secured against anything you own, such as a property or vehicle, so they are more reliant on your credit score.
You can find out more information on how credit scoring works here.
When you start looking for debt consolidation loans, there are a few steps you can take to make sure you get the right one for your needs.
Decide how much you need to borrow: Add up all the debts that you want to pay off with your debt consolidation loan. Don’t forget to include any extra charges you’ll need to pay to pay your debts off early.
Think about how long you’ll need to pay it back: The longer you take to pay back your debt consolidation loan, the lower your monthly payments will be. But, of course, the longer you take to pay it off, the more interest you’ll end up paying back overall.
Look for the lowest interest rate: The interest rate is the biggest cost on consolidation loans, so it’s important to find the lowest rate you can. Lenders advertise their representative APR, but that’s just the rate they promise to give to 51% of borrowers. The rate they offer you could be higher or lower depending on your credit history and other factors.
Our debt consolidation loans go up to £25,000. That means you could consolidate up to £25,000 of debts using an unsecured debt consolidation loan.
You’ll find that debt consolidation loans usually offer terms of between one and five years. However, some of the UK’s leading lenders do offer up to seven years. In general, longer loan terms require you to borrow a larger amount of money, so they may not be available if your consolidation loan amount is less than £10,000.
It’s only worth doing debt consolidation if you can find a debt consolidation loan that gives a cheaper interest rate than you’re already paying cumulatively on your debts.
Our loan repayment calculator can help you to see how changing the term can affect your monthly payments and in turn make it cheaper in the long run. By trying out different term lengths and interest rates, you can see if debt consolidation is suitable for you.
"When working out if an unsecured debt consolidation loan can save you money, make sure you take any early repayment charges on existing debts into account.
"If you don't do this, you could see your new loan end up costing you more than your old ones."
A debt consolidation loan may not be your only option. Even the cheapest consolidation loans might not be the best way to consolidate debt, depending on your situation. It’s sensible to look into alternatives as well.
And remember, if your debts are getting on top of you, or you don't have the best credit rating, you can get free debt advice from a range of charities in the UK¹.
Our comparison tables include providers we have commercial arrangements with. The number of listings in our tables can vary depending on the terms of those arrangements, as well as other market developments. They are all from lenders regulated by the Financial Conduct Authority. For more information you can also see how our website works.
We have commercial agreements with some of the companies in this comparison and get paid commission if we help you take out one of their products or services. Find out more about how our website works.
You do not pay any extra and the deal you get is not affected.
No, you can choose which debts to pay off. However, if you keep any open you have to show you can afford to pay them back alongside any new loan.
No, it is usually paid to you and then you need to pay off each of your debts separately.
A debt consolidation loan is just like any other form of borrowing. As long as you keep up with the repayments you’ll be fine. In fact, you’ll improve your credit score by lowering your debt in the long term.
Conversely, if you don’t keep up with the repayments, it will negatively affect your credit rating. So you need to make sure you find a debt consolidation loan you can afford.
When you miss a payment on your loan, you'll be charged a fee. You may be issued with a County Court Judgement or have to declare yourself bankrupt if you continue to miss payments.Read More
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Last updated: 31 January 2022