Debt Consolidation Loans

Please note, we don’t offer debt consolidation loans. This page is for information only, to help you understand how they work and what to consider before applying.

If you’re struggling with multiple debts, it can feel overwhelming – especially when payments are due at different times to different lenders. A debt consolidation loan combines all your debts into one, leaving you with a single monthly payment and one lender to deal with.

Sounds simpler? It can be – but consolidation loans aren’t always the best option – and, in some cases, they can make things worse.

Pros of Debt Consolidation Loans

• One simple monthly payment – You’ll have fewer statements and only one lender to keep track of.
• Could lower monthly payments – If your new loan has a better interest rate or longer term, it may reduce what you pay each month.
• May protect your credit (in the short-term) – If you consolidate before missing payments, you could avoid defaults or further credit score damage.

Cons of Debt Consolidation Loans

• You’ll take on more credit – This could leave you worse off if you start missing payments again.
• Longer repayment period – You may pay less each month, but more in total due to interest.
• Set-up costs – Some lenders charge fees or penalties for repaying old debts early.
• Temptation to borrow more – Once credit cards are cleared, it can be tempting to use them again.
• Higher interest for poor credit – If your credit score is low, your new loan may come with a much higher rate.
• Secured loans put your home at risk – If you secure the loan against your home and fall behind, your property could be repossessed.

Types of Debt Consolidation Loans

• Secured- Tied to your home or another asset – riskier if you can’t repay.
• Unsecured – Not tied to any asset – usually comes with higher interest.

Alternatives to debt consolidation

If you’re looking for a way to simplify your finances and get back on track, these non-lending solutions might be safer and more sustainable:

• Debt Management Plan (DMP)
• Individual Voluntary Arrangement (IVA)
• Debt Relief Order (DRO)
• Bankruptcy
• Repayment Arrangement
• Trust Deed
• Debt Arrangement Scheme (DAS)
• Sequestration
• Minimal Asset Process (MAP)
• Debt Settlement

Should I consolidate my debt?

You should only consolidate your debt if:

• You’re confident it will reduce what you pay overall.
• You can afford the new repayments now and in the future.
• You’ve checked all fees, rates and terms carefully.

Get debt advice first

Before committing to a consolidation loan, speak to an expert for impartial, confidential advice. We’ll help you explore all your options – and support you in choosing the one that’s truly best for you.

Call us free on 0800 316 1833, or fill in a form to start a chat a live chat or message us on WhatsApp.