Personal Loans for Debt Consolidation

Combining multiple types of debts, such as credit cards, store card balances, overdrafts, or loans, into a single monthly payment can help to clear your finances faster. It can also make it easier to manage your budgets and potentially save you some money. One way to achieve this is to use a personal loan for consolidation, which will provide the cash you need to pay off your existing debts, then repay your new lender in monthly instalments. If this is something that you could benefit from, Debt Consolidation Loans may be able to help.

  • Large panel of debt consolidation loans lenders
  • Years of experience in the finance industry
  • Easy online application process
  • Personal approach to application reviews
  • Bad credit applications considered
  • FCA authorised, responsible broker service

We are a debt consolidation broker service, offering a large panel of lenders, many of whom will be able to provide personal loans for debt consolidation. We take the time to personally check each application for your needs and affordability, then turn to our lenders to find a solution that works for you. Once we have found the best option for your requirements, the lender will be in touch with you to finalise your application.

If you are ready to start your application, simply apply online and our team will work quickly to provide a personalised lending decision. If you need more advice, we will be discussing whether personal loans are good for debt consolidation on this page, as well as providing alternative options.

Personal Loans for Debt Consolidation | Debt Consolidation Loans

What Are Personal Loans?

Personal loans typically allow you to borrow between £1,00 and £15,000, but some lenders may offer up to £25,000, depending on your affordability and the products they provide. The more money you borrow, the longer you may need to repay, so it is worth considering your own budget and financial commitments before applying for a personal loan for consolidation.

There are two types of personal loans that you can use. The first is an unsecured loan for debt consolidation, which can provide you with the funds you need without being secured against a high value asset. While this reduces the risk of repossession to the borrower, it poses a risk to lender instead, so you may find that most unsecured personal loans have high interest rates.

The second type is a secured debt consolidation loan, which requires security against a high value asset, such as your home. You should only apply for this option if you feel comfortable and confident about making the repayments each month because your asset will be repossessed if you default. The lender will look at the borrower’s assets to determine how financially viable the borrower is, based on the collateral they own. As there is added security with this loan, you may find that lenders offer more affordable interest rates, but it is an option that needs to be considered very carefully.

To find the best loan for your financial situation, you should compare personal loans for debt consolidation and read reviews. You can also use loan comparison tools to create visualisations of all the available options and find a solution that works for you.

Why is it a good approach to combine all your debts into one simple consolidated loan payment?

  • You can use this opportunity to fix your personal finances 
    Complicated debt payments being taken out of your bank account this day, that day or every other day will confuse anybody – plus, how can you budget your household bills around it? It makes sense to have just one simple streamlined monthly payment to help you get back in-control of your finances and less likely to default on a debt payment.
  • A loan could cut down the total amount of debt you owe
    Wondering about how to reduce my credit card payment? Well, credit card debt consolidation loan could help you out. It may actually seem too good to be true to say this, but by re-packaging all your current debts into a loan, you could negotiate a smaller interest rate, which will eventually save you money in the long-term.
  • You can eventually develop a better future credit score by completing the full-term of your loan
    Being focused on completing all your loan payments on time and in full will improve your credit card score in the long-term because it proves that you are a responsible borrower. It opens up future lending opportunities at better interest rates. 

 

What Are The Advantages Of Debt Consolidation Personal Loans?

There are several benefits to securing a personal loan for debt consolidation, especially if you find yourself struggling to make multiple repayments or are worried about missing repayments. These include:

  • Fixed payments – the monthly payments on a personal loan are typically fixed, so you know how much you will be repaying each month, which can make it easier to budget.
  • Flexible repayment terms – depending on the lender, you may be able to choose how long you need to repay the loan. The terms will vary across the market, but many lenders offer up to 5 years.
  • Reducing overall repayments – if the interest rate on your personal loan for debt consolidation is less than the combined interest of the previous debts, you may be able to save money each month. Rather than paying off multiple credit accounts with varying interest rates, you will have one payment per month with a single interest rate.
  • Easier budgeting – as you will only be making one payment each month to a single lender, rather than multiple payments to various credit accounts, you may find that managing your finances becomes more straightforward. You will be able to create an effective budget to stick to and stop worrying about paying different lenders.
  • Boosting your credit rating – you may see a boost to your credit rating if you pay off the total amount in full on time. This will show on your credit file as a closed account with full repayment, which would be ideal for future credit applications.
  • Providing peace of mind – baring the burden of financial stress or worry is not good for anyone, but combining your debts into a manageable figure and having an achievable scheduled repayment date each month could help to ease your mind.

What Are The Disadvantages Of Debt Consolidation Personal Loans?

Along with the advantages of consolidation loans for bad credit, there are also several disadvantages to consider. While there are many easy personal loans for debt consolidation available, this type of loan is not suited to everyone. You should make sure you consider the pros and cons carefully to decide whether this type of loan is the right choice for you. The disadvantages include:

  • Not all lenders offer them – you will need to check before applying to ensure your chosen lender allows their loans to be used as consolidation options.
  • Potentially high interest rates – if your credit score is not up to scratch, you may only be offered high interest rates. Your lender may offer bad credit loans, but it is worth checking before applying.
  • Paying more overall – while some personal loans may result in you paying less overall, some may result in you actually paying more. It is wise to conduct your own research to find the best interest rates and lenders that offer deals that are more affordable than what you had been paying on your multiple debts.
  • Early repayment charges – depending on the lender, you may have to meet an early payment charge on one or more of your existing debts if you clear them with a personal loan.

Before you apply for a personal loan for debt consolidation, you should review your current monthly income and the expected length of time to repay the debts. You should also compare all the options available to you, and take the time to find the best solution for your finances.

What Are The Alternatives To Personal Loans For Debt Consolidation?

While a personal loan can be a useful way to consolidate your debts, there are a few other options that you may want to consider.

Balance Transfer Credit Card

If you have debts across a number of credit cards or store cards, they can be moved to a balance transfer card for easy management. If you choose a 0% balance transfer credit card, you will not have to pay interest on your debt for several months, which can save you money and help to clear your debt quickly. However, some balance transfer credit cards may come with a fee based on the amount you transfer, so make sure you check the fine print.

Secured Loan

A secured loan usually allows you to borrow a larger amount than a personal loan, and you may be able to repay over a longer time frame. However, a secured loan will need to be secured against a high value asset, such as your home. This means that if you cannot keep up with repayments, you risk losing your asset, so you should only consider this option if you are confident about making repayments. As there is less of a risk for the lender, you may find that the interest rates offered on secured loans are reasonable.

Release Equity From Your Home

Another option is a debt consolidation remortgage and release equity from your property. It is usually better to do this if your existing mortgage deal is coming to an end, otherwise you may have to pay an early repayment fee. Providing your property’s value has increased, you could choose to take out a new, larger mortgage and use some of the equity to pay off other debts. However, bear in mind that the size of your mortgage loan will increase, so your monthly payments might also go up, even if you secure a mortgage with low interest rates.

If you need any more help with finding a suitable alternative to personal loans for debt consolidation, or advice on whether personal loans are good for debt consolidation in your circumstances, please seek impartial support from the Money Advice Service.

Choose Us For Your Easy Personal Loans For Debt Consolidation

At Debt Consolidation Loans, we make our lending decisions as they should be made – by humans, rather than automated software. We hold our applicants’ best interests at heart, and personally review each application for affordability and to understand our customers’ needs. We consider all applications and will do everything we can to ensure you can make repayments. However, if we felt that you would struggle to make repayments, we would need to decline your application for your own wellbeing.

We aim to offer flexibility in our repayment plans, and with our easy personal loans for debt consolidation, you will be able to make payments on a pre-agreed date each month that works with your budget. This can help you to manage your finances, as well as give you peace of mind. We are also completely transparent, so our soft search will not damage your credit rating and there are no fees for using our service.

If you would like any more information, you may find what you’re looking for in our FAQs, or you’re welcome to contact us. When you’re ready, it’s quick and easy to apply on our website.