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Debt consolidation loans

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Updated May 2022

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Why compare debt consolidation loans with MoneySuperMarket?

  • It’s simple and speedy

    We’ll ask you a few questions about you and your finances. We’ll then search the market and you’ll see the results instantly.

  • Get the right loan for you

    When you compare loans with us you can compare with confidence. Comparing won’t harm your credit score. We’ll only show you loans you’re likely to be accepted for.

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What is a debt consolidation loan?

A debt consolidation loan is a type of loan that's used to combine all your existing debts into one pot. All you’ll need to do is apply for a loan for the amount you owe in existing debt and if approved, you can use the funds to pay off your other borrowing. You’ll then pay off the loan over time, usually in monthly repayments.

A debt consolidation loan could make your debt easier to manage, as well as reduce the amount of interest you pay by having all your debt in one place at a lower interest rate.


How do debt consolidation loans work?

A debt consolidation loan lets you move your existing debts to one loan so you only need to make one monthly repayment. Here’s how it works:

  • Work out what you owe

    Look at your existing credit card, loan and overdraft debts. Calculate the total value of the loan you’ll need to cover these existing debts and borrow that amount

  • Pay off debt with the loan

    Use the loan to pay off existing borrowing. Having just one loan reduces the amount of repayments you have to make each month by having your debt in one place

  • Pay back the loan

    Once you’ve paid off your existing debts you’ll then pay back the consolidation loan within the set term. Having just one monthly repayment could make things easier to manage

What can I use a debt consolidation loan for?

A debt consolidation loan can be used to pay off different types of debt, including: 

  • Credit card debt

    Many credit cards charge high APRs making them an expensive way to borrow long-term

  • Personal loan debt

    Unsecured loans are often taken out to fund a car purchase, home improvements or a holiday 

  • Overdraft

    Most banks charge high interest rates on overdrafts which, over time, can lead to a big debt 

  • Store card

    While some store cards offer up-front discounts on spending they often have high APRs and fees

With a pre-approved loan, the deal you see is the deal you get

When you apply for a loan, it’s not always clear what deal you’ll be offered or whether you’ll be accepted. But when you’re pre-approved for a loan, you know the deal you see is the deal you’ll get – you’ll know where you stand, with information that will help you make the right choice.

  • Apply with confidence

    When you’re pre-approved, the loan amount, duration and interest rate are all confirmed

  • Tailored to you

    When you know what you’ll be able to borrow and how much it will cost, you can choose a loan that’s right for you

  • You’re in safe hands

    This helps protect your credit score as you’re less likely to be rejected when you apply

What are the advantages and disadvantages of a debt consolidation loan

Whether a debt consolidation loan is the right option for you will depend on your financial situation. Here’s some pros and cons of debt consolidation loans, to help you make the right choice:

  • Tick

    Reduce your monthly repayments

    This works particularly well if you have quite a few outstanding debts accuring interest 

  • Cross

    Missed payments have consquences

    You will damage your credit score if you don't make your repayments in full each month

  • Tick

    Easier to keep track of your debt

    Managing one payment a month is more straightforward than several at once

  • Cross

    You may lose your home or car

    If you can’t keep up with the repayments on a secured loan your home or vehicle could be repossessed.

  • Tick

    Boost your credit score

    It's easier to make one repayment every month, and doing so can improve your score

  • Cross

    Other options are available

    For example, a 0% balance transfer credit card may suit someone with more modest debts

How much will a debt consolidation loan cost?

Debt consolidation loans are designed to help you manage your existing debt, so the loan will need to cover your existing debts’ value. How much a debt consolidation loan will cost will depend on several factors:

  • Loan amount: This will depend on the value of the debts you plan to consolidate 

  • Term: How long you intend to borrow (the average term is 4 years)

  • APR: This is the loan interest rate plus any other charges like annual fees or arrangement fees

  • Any extra fees: Providers may charge a settlement fee if you pay the loan off early

Always check the cost of the consolidation loan is worthwhile, compared to what you're paying on existing debts. Our loan calculator can give you a good idea of how much a loan is likely to cost. That way you can have confidence that your borrowing is affordable.

Can I get a debt consolidation loan with bad credit?

If you’ve struggled with debt in the past and have a low credit score you may not be offered the best loan deals. But the good news is that there are specialist providers offering debt consolidation loans for bad credit. Because you don’t have the best credit score, you may be offered a secured debt consolidation loan. Remember that with this type of loan, if you don’t keep up with payments, you risk losing your home.

Representative 29.9% APR

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Victoria Russell

Our expert says


Consolidating debt could be the right option if you’re struggling with high interest rates and not clearing what you owe quickly enough. Before you apply, just make sure you’re happy with the terms of the new loan, including how much you’ll be paying each month and for how long.

- Victoria Russell, Money & Savings Expert

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How to compare debt consolidation loans with MoneySuperMarket

We’re here to help find the right loan for you, so we’ll tell you which rates you’re guaranteed to get. 

  • It doesn’t take long

    Tell us a little about yourself, your finances and the loan you want

  • We’ll browse the market

    We’ll search through loans from a wide range of lenders on the market

  • Compare loans

    You’ll be able to sort loans by the overall cost and the likelihood you’ll be accepted

Debt consolidation loans can be a good way to take control of your borrowing, especially if you owe money to a number of different lenders. However, they aren’t right for everyone. If you only have a few debts on which you are already paying an attractive APR, it might be worth concentrating on sticking to your existing repayment plans. 

Many standard personal loans can be used for debt consolidation. However, some lenders prefer you to use their loans for specific purposes such as buying a car or renovating your home, so it’s worth checking this before you apply. If you have a lot of debt, you may also find it harder to qualify for a low-cost personal loan. 

Whether or not a debt consolidation loan is right for you will depend on the sort of debts you have already. For modest credit card debts, for example, a 0% balance transfer credit card could be a good alternative. But if your debts are substantial, and you’re struggling to manage the repayments, a debt management plan may be a more suitable solution. 

Most banks offer secured or unsecured loans which can be used for debt consolidation. Make sure you weigh up which loan is the right option for you. While a secured loan may come with a lower interest rate, you are at risk of losing your car or home, for example, if you struggle to keep up with your repayments. 

A debt consolidation loan can be used to combine all your existing debts into one loan payment – making it easier to manage rather than having several payments to different lenders. While a debt consolidation loan won’t reduce the amount you owe, it can make your repayments cheaper if you find a loan with a lower interest rate.

Yes, you can consolidate debt with a credit card. You can do this with a balance transfer card which moves your debt onto to a lower interest rate card.

Whether or not a debt consolidation loan is right for you will depend on your circumstances and financial habits. If you keep up with payments, it can help make your debt more manageable. If you miss repayments, you run a serious risk of drowning in more debt.

A debt consolidation loan can be unsecured or secured. Your credit score can play a part in the type of loan you’re offered. If you have bad credit, you’re more likely to be offered a secured debt consolidation loan.

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