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Home  >  What is a Debt Consolidation Loan?

What is a Debt Consolidation Loan?

Debt consolidation loans

A debt consolidation loan could be an ideal solution if you want to turn debts with multiple creditors into one simple payment. By borrowing enough money to pay off the debts you owe now, you will only have to repay one lender. This could make your life a lot simpler. Find out more about your debt consolidation loan here.

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Representative 12.9% APR. Representative Example: Borrowing £7,500 over 60 months, repaying £167.57 per month, total repayable £10,054.20. Total cost of credit £2,554.20. Interest rate 12.9% (variable). The lenders on our panel offer loans for 12-120 months, with rates from 4.4% APR t o 49.9% APR.

Why choose us to help?

You could have the money in as little as two hours

Our online application takes minutes to complete

Focus on one monthly payment

You won’t pay any upfront fees

Got bad credit? No problem. You will always be considered

We have a team of experienced advisors

What does a debt consolidation loan do?

By taking out a debt consolidation loan which covers all your outstanding debts, you’ll hopefully only have to pay back one creditor at the end of every month. This brings everything you owe into one place and can help to alleviate the stress from having multiple lenders chasing you. As well as this, the loan could help reduce the amount you pay each month.

However, before making your application it’s important you have a good understanding of the different consolidation loan types and the circumstances when it is the best solution. Debt consolidation loans have two forms, secured and unsecured:

SECURED – This is when a loan is fixed against an asset, usually your home. By securing your property on the loan you are more likely to be accepted. However, if you fall behind on payments you could risk losing your home.

UNSECURED – An unsecured loan is when you don’t have to offer your home, or any other asset, as security. However, you may also have to pay more interest on this loan than you would if it was secured.

What does a debt consolidation loan do?

By taking out a debt consolidation loan which covers all your outstanding debts, you’ll hopefully only have to pay back one creditor at the end of every month. This brings everything you owe into one place and can help to alleviate the stress from having multiple lenders chasing you. As well as this, the loan could help reduce the amount you pay each month.

However, before making your application it’s important you have a good understanding of the different consolidation loan types and the circumstances when it is the best solution. Debt consolidation loans have two forms, secured and unsecured:

SECURED – This is when a loan is fixed against an asset, usually your home. By securing your property on the loan you are more likely to be accepted. However, if you fall behind on payments you could risk losing your home.

UNSECURED – An unsecured loan is when you don’t have to offer your home, or any other asset, as security. However, you may also have to pay more interest on this loan than you would if it was secured.

What debts can be consolidated?

Debt consolidation loans cover a wide variety of expenses. For example:

  • Personal loans

  • Store cards

  • Credit cards

  • Short term loans

  • Utility arrears

  • Phone arrears

However, there are certain outgoings which cannot be consolidated. These include:

  • Mortgage payments

  • Court fees

  • Car or vehicle loans

Please note this list is not exhaustive. If you’re concerned about a type of debt which isn’t here, you should contact us. Chances are, we might be able to do something about it.

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For more information, take a look at our guide: ‘When is debt consolidation worth it?‘

If you still think a consolidation loan could be right for you, then our trusted partners can provide amounts up to £75,000 and will consider all credit scores. Our application form is simple and you won’t pay any upfront fees.

Is a consolidation loan right for me?

To understand whether a consolidation loan is right for you, you should fit the following criteria:

  • You’re struggling to make ends meet due to debts from multiple creditors.

  • You have a steady and stable source of income which provides enough to make the repayments.

  • The loan would work out as better value than your current situation.

Is a consolidation loan right for me?

To understand whether a consolidation loan is right for you, you should fit the following criteria:

  • You’re struggling to make ends meet due to debts from multiple creditors.

  • You have a steady and stable source of income which provides enough to make the repayments.

  • The loan would work out as better value than your current situation.

For more information, take a look at our guide: ‘When is debt consolidation worth it?‘

If you still think a consolidation loan could be right for you, then our trusted partners can provide amounts up to £75,000 and will consider all credit scores. Our application form is simple and you won’t pay any upfront fees.

When a consolidation loan isn’t right

Whether or not a debt consolidation loan is the right decision depends entirely on your situation. If the following applies to you then this solution may not be the best choice:

  • You can’t afford any sort of monthly loan repayment.

  • You don’t clear all your debts with the loan.

  • You end up paying more overall because the monthly repayments are higher or the term of the agreement is longer.

Debt consolidation loans for people with bad credit

If you have bad credit some companies may reject your debt consolidation loan application. We think this is unfair and we believe, no matter how poor your credit score, your history should not get between you and resolving your debts.

Therefore, Consolidation Express will always consider you. However, to get the best interest rates on your loan, you will generally need a good credit score. As a result, while you may receive the funds you’re after – and could start dealing with your lenders by this time tomorrow – you may have to pay higher interest rates than other customers.

Debt consolidation loans for people with bad credit

If you have bad credit some companies may reject your debt consolidation loan application. We think this is unfair and we believe, no matter how poor your credit score, your history should not get between you and resolving your debts.

Therefore, Consolidation Express will always consider you. However, to get the best interest rates on your loan, you will generally need a good credit score. As a result, while you may receive the funds you’re after – and could start dealing with your lenders by this time tomorrow – you may have to pay higher interest rates than other customers.

Considerations of debt consolidation

Although debt consolidation has several advantages, it does have some negatives. For example:

  • Debts are not written off and must be repaid in full.

  • There are interest rates associated with the loan – these charges are not frozen.

  • If you don’t keep up with the loan repayments, an although you should have time to rectify this, this could result in legal action.

  • Depending on the terms you’ve selected, it may take longer to repay your debts than would have otherwise been the case. However, you should be in a better financial state.

How do I apply?

If you decide this is the right option for you, then applying for the loan itself is easy.

Fill out our short online application form

You will need to tell us how much you want to borrow and complete the section on personal details. All in all, this shouldn’t take you more than five minutes. Once you’ve completed it, our advisors will do the hard work and be in touch with your options shortly.

Settle existing debts with the loan

If approved for the loan, you’ll need to distribute the money between your existing creditors – closing accounts with them. You should then be left with just one creditor (us) who you will pay back monthly.

Keep up with the monthly repayments

Don’t worry, the repayment terms should be far better than what you’re currently on! Once you’ve repaid your consolidation loan, you should have cleared your debts and you’ll be ready to start a new chapter in your life.

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FAQs

How likely is it to be accepted with a bad credit score?

At Consolidation Express, we want to help where we can and – regardless of your credit history – we promise your application will get treated with the respect it deserves. After running our standard checks on affordability, if we believe that a loan is the best solution for you then we will try our best to get this granted. Only one way to find out though, apply and we’ll get the ball rolling!

Will a consolidation loan hurt my credit score?

Whether a debt consolidation loan will hurt your credit score depends on your repayments. We reckon you’re a trustworthy person so, if you keep up with these, your credit rating should actually improve. This is quite the opposite from hurting it!

What are the alternatives to a debt consolidation loan?

There are many other solutions to a debt consolidation loan so don’t worry if you’re not sold on this idea. When you apply, an advisor will take a look at your circumstances and might suggest an alternative. One which might be better suited to your needs.

What is a government debt consolidation loan?

Government debt consolidation loans do not exist. debt management companies have been adopting phrases such as ‘government debt consolidation’ or ‘government debt advice’ which implies that the government approve of this kind of loan. However, this is never the case and the Financial Conduct Authority are working hard to clamp down on this kind of behaviour.

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