What Is An Unsecured Debt Consolidation Loan?

Before applying for a loan, it is key to know what you’re applying for. With this type of loan, you will be able to borrow enough money to pay off your current debts and owe money to a single lender. They are specifically designed to help people who are struggling with multiple debts and keeping up with repayments by providing them with a way to merge their debts into one figure. The money they borrow will be used to pay off these existing debts, then the loan and interest will be repaid to the consolidation loan lender. Specifically, it allows you to borrow the money needed without securing it against any collateral, reducing the risk for you as a borrower.

There are also unsecured debt consolidation loans for bad credit available, which allow you to pay off your existing debts, even if you have had financial difficulty in the past. This type of loan focuses on your affordability to come to a lending decision, rather than your entire credit history, taking your monthly income, essential outgoings, and any other financial commitments into consideration. You can apply for these loans in total confidence as our soft search will not affect your rating. No matter your financial situation, we may be able to help.

Unsecured Debt Consolidation Loans | Debt Consolidation Loans

How Much Are Unsecured Debt Consolidation Loans?

Unsecured consolidation loans are not the ideal choice for all financial issues as they can be a costly option. While consolidating your debts can help to make repayments simpler and seemingly cheaper, unsecured loans are risk to the lender as there is no collateral if an applicant defaults on the payments. Because of this, unsecured loans tend to be more expensive than other loan options, no matter if you have poor credit or not.

While this option may not be the ideal solution for all budgets, at Debt Consolidation Loans, we aim to find an option that suits your needs and affordability. This means that if we feel like you will not be able to afford repayments, we will decline your application to avoid leaving you out of pocket. However, if we review your monthly income and essential outgoings, and you will be able to comfortably repay each month, then we may proceed with your application. This applies to our range of consolidation offers, including debt consolidation mortgages and credit card consolidation loans. We keep our customers’ best interests at heart and would never allow anyone to borrow more than they could afford, so you are in trusted hands with us.

What Are The Advantages Of Unsecured Consolidation Loans?

There are several benefits to securing a consolidation loan of any kind, especially if you find yourself struggling to make multiple repayments or are worried about missing repayments. This includes:

  • Improving your budget – our loans allow you to merge your existing debts into one sum, including credit card repayments, car loans, and store card debts. By consolidating these debts into one figure, you will only need to pay one to a single lender fee per month, which could make repayments easier to manage and budgeting a breeze.
  • Boosting your credit rating – you may see a boost to your credit rating if you pay off the total amount in full, which could be particularly useful if you need unsecured debt consolidation loans for bad credit. This will show on your credit file as a closed account with full repayment, and future lenders will see this as a positive aspect of your credit file.
  • Reducing overall repayments – if the interest rate on your loan is less than the combined interest of the previous debts, you might be able to save money each month. Rather than paying different amounts with varying interest rates, you will have one payment per month with a single interest rate. You will need to check if you will save money before applying, as this will not be applicable to everyone.
  • Providing peace of mind – carrying the weight of financial stress or worry can have a strain on your life, but our loans may be able to help. By combining your debts into a manageable figure and having an achievable scheduled repayment date each month, you might see improvements to your mental wellbeing.

What Are The Disadvantages Of Unsecured Consolidation Loans?

Along with the advantages, there are also several disadvantages to unsecured debt consolidation loans to consider. This type of loan is not suited to everyone, so make sure you weigh up the pros and cons carefully to determine whether this type of loan is the right choice for you. The disadvantages include:

  • Paying more overall – while some consolidation loans may result in you paying less overall, some may result in you paying more than you expected. You should do your own research to find the best deals and find a lender that offers a lower interest rate than what you had been paying.
  • Potentially high interest rates – if you have poor credit, lenders may only offer high interest rates on their loan options. You may find secured loans offer better interest rates as they are secured against a high value asset, but this can pose a risk to you if you default on the loan. Do your own comparisons to see which solution would be the better choice for you.

Before you apply for unsecured consolidation loans, you should review your current monthly minimum payments and how long you will need to repay in full. If you feel as though you will struggle to make repayments, it could be a better choice to try and improve your credit score, boost your savings, or find a suitable alternative. If you need more help with your finances, please seek impartial support from the Money Advice Service.

Choose Us For Your Unsecured Consolidation Loans

At Debt Consolidation Loans, we truly hold our customers’ best interests at heart. We take a personal approach to our checking process, so we can manually review applications for affordability and take the time to understand our customers’ needs. We consider all applications and will do everything we can to ensure you can make repayments if you urgently need cash to help. However, if we felt that you would struggle to comfortably make repayments, we would need to decline your application for your own wellbeing.

We offer flexibility in our repayment plans, and with our unsecured debt consolidation loans, you will be able to make payments on a pre-agreed date each month to suit you. This can help you to budget, as well as give you peace of mind when it comes to planning your finances. We also pride ourselves on our honesty and transparency, so there are no fees for using our service and our soft search will not damage your credit rating.

If you would like any more information, check our FAQs or feel free to contact us. If you are ready to start searching for consolidation loans, please apply now.