A quick guide to debt consolidation loans

If you're repaying your unsecured debts reasonably well from month to month, but you'd like to make keeping track of multiple debts with multiple lenders that bit more straightforward, a debt consolidation loan could be an ideal approach to your finances.

What is a debt consolidation loan?

A debt consolidation loan is a new loan you could take out to pay off your existing unsecured debts. Taking out a debt consolidation loan could only be a possible approach to your debts if you (a) are already repaying your debts comfortably, (b) can afford both the monthly payments towards the loan, and (c) can commit to making these payments until you've paid the loan off in full.

By consolidating your multiple unsecured debts with a loan, you would effectively combine your outstanding debts into one single debt - which you'd then start repaying with a single payment to a single lender every month. This could make repaying your debt simpler and less stressful every month and make your finances easier to manage.

How could a debt consolidation loan help me?

You may decide to repay the consolidation loan over a longer period of time, which means the payments you'll make every month will be smaller than if you agreed to a shorter repayment period. However, you should bear in mind that making smaller payments over a longer period can increase the overall amount you'll repay, as you'll be paying interest for longer too.

If you find it helps you manage your finances better, taking out a debt consolidation loan could also help you to avoid missing payments - or making them late - which could lead to charges and damage your credit rating.

Furthermore, repaying all your existing debts with a consolidation loan could give you the opportunity to cut up all your credit cards and/or cancel any remaining overdraft facilities you have - and possibly help you get into better financial habits for the future.

Request a callback

Speak to one of our advisers on

We'll help find you the best solution to your debts