Debt Consolidation

Over 33 personal loans, secured loans, debt consolidation loans and car loans

I want to choose a loanSee all loans

  • Takes 30 seconds
  • Shows loans from all lenders
OR

Smart loan searchSee all loans that match my needs

  • Takes 2 minutes
  • Saves time by showing how likely you are to be accepted
  • Helps you protect your credit rating
  We're free to use and compare all UK loans.

 

Warning: Late repayment can cause you serious money problems. For help, go to moneyadviceservice.org.uk

 

MISSING PAYMENTS ON A LOAN WILL HAVE SEVERE CONSEQUENCES AND MAY MAKE OBTAINING CREDIT MORE DIFFICULT IN THE FUTURE.

 

SECURED LOANS: YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE, LOAN OR ANY OTHER DEBT SECURED ON IT.

 

Debt consolidation loans

Lots of us owe money on more than one credit card or have several different credit agreements or loans in place. It can be tricky keeping track of them all – and if you get your finances muddled up and miss payments, you can soon get into big trouble.

This is when a debt consolidation loan can come in handy. As the name suggests, you consolidate all your debts into the one loan, so you only have one payment to make each month. Streamlining your debt obligations in this way can take a lot of the hassle out of managing your money.

Here, we explain exactly how this type of loan works, and why having one could help you get your finances back on track…

How do debt consolidation loans work?

With a debt consolidation loan, you simply move all your borrowing, or a significant chunk of it, onto the one loan.

You can then close down the various credit card and loan arrangements you’ve had previously, using your consolidation loan to clear the debts. Rather than making lots of separate payments to different lenders every month, you’ll only have to make one to your loan provider.

With each separate existing loan you look to pay off, check whether there are any early repayment charges – and, if so, factor them into your calculations.

Most debt consolidation loans are unsecured, which means the lender can’t lay claim to your home if you are unable to keep up with repayments. That doesn’t mean you can be casual about paying what you owe, however – the lender could still pursue you through the courts for its money.

Be wary of loans which are secured, as this means that the debt is held against your property (or another asset), so if you’re struggling with payments, your home could be at risk.

Pros and cons of debt consolidation loans

The biggest advantage of a consolidation loan is that all your debts are in one place, so you only have one interest rate to keep track of, and one payment to make every month.

This can make managing your debts much more straightforward than having to think about making several payments every month.

It will also mean you can close down other credit card and loan accounts, which should improve your credit rating as it will show lenders that you are managing your finances responsibly.

However, one disadvantage of consolidations loans is that you might end up paying more interest than you need to on some of your borrowing.

For example, if you are transferring credit card debts across to a consolidation loan, you will end up paying more interest than if you moved these balances to a balance transfer credit card offering a 0% introductory period on balance periods for several months.

Things to note when taking out a debt consolidation loan

When consolidating debts, work out how big a loan you will need and check the interest rate, as rates are usually tiered depending on how much you borrow. As a general rule, rates are lower the more you borrow, so if you are only just in a lower tier, it might make sense to borrow a bit more if that means you will pay a lower rate of interest.

If you think you might be able to pay off your debt consolidation loan early, check to see if there are any penalties for doing this. Remember that the longer you take to pay it off, the more interest you will pay overall.

Finding the right debt consolidation loan for you

There are lots of different loans to choose from if you are looking to consolidate debts, so always to plenty of research before applying for one to make sure you secure the best possible deal.

Debt consolidation loans

Debt consolidation loans help you settle a number of separate debts so you can streamline your finances with one regular payment. Is loan consolidation right for you? Here’s all you need to know.

Explore
Personal loans
Secured loans
Bad credit loans
Car finance
Debt consolidation
Wedding loans
Home improvement loans
Holiday loans
Business loans
Guides
Guide to home improvement loans
Guide to getting a loan with bad credit
Bridging loans guide
Loans for young people
Guide to loans for unemployed
See all our loans guides
Other useful links
Try our debt test
Credit reporting services
0% purchase credit cards
Payment Protection Insurance
Loans jargon buster
Close

Cookie use

MoneySupermarket uses cookies, small text files which are downloaded to your computer's hard drive when you visit most websites.

Read more

Cookies are harmless files which can help improve the experience. Cookies allow websites to respond to you as an individual. The website can tailor its operations to your needs, likes and dislikes by gathering and remembering information about your preferences.

Read less | Cookie Policy

Close