Don't Borrow Again, it's Just More Debt
Think about it. If you've debts of say £9,000 and consolidate these into one loan over say 5 years, you're looking at about 12% APR minimum. You may be borrowing £9,000 but, plus the interest, you're committing to paying back £12,000 with a debt consolidation loan.
If you're looking to consolidate debts, please try the Debt Solution Finder before applying for an another loan and potentially damaging your credit rating*
Debt Consolidation Choices
Instead of a debt consolidation loan, you may wish to consider one of the following:
An IVA helped me keep my home.
"I actually saved money with an IVA and was able to get back on top of my mortgage repayments."
Individual Voluntary Arrangement (IVA)
IVAs are intended for people without a realistic chance of repaying their debts in full and who would otherwise be under threat of bankruptcy. If you owe at least £10,000 and can afford at least £150/month towards your debts, consider an IVA.
IVA advantages over a Debt Consolidation Loan
- Some debt can be written off with an IVA
With a consolidation loan, you may be reducing monthly payments, but will be repaying your debts in full, together with ongoing interest.
- You're not putting your home at risk with an IVA
If you take out a secured loan on your property, you're increasing the risk of your home being repossessed if you fail to make repayments.
- More room for negotiation later
If you consolidate your debts into one loan with one creditor, you will be in a weaker position to negotiate should you fall in to difficulties in the future.
Learn more about Individual Voluntary Arrangements.
Did You Know?
We currently have over 29,000 clients on Debt Management with us, making us one of the nation's largest and most trusted providers.
A Flexible Debt Management Plan (DMP)
A DMP allow you to you repay your loans at an affordable level. It's suitable for multiple debts totaling as low as £1,500, including Pay Day Loans. Payments are from £20/week or £80/month.
- Tailored to you
We look at your living costs to see what you have left to pay towards your unsecured debts.
- We negotiate with your lenders
We'll negotiate reduced payments with your creditors. In the majority of cases (86%), we get charges and interest stopped.
- One payment
No more multiple payments, all on different days. Make a single payment to us and we pay all your creditors.
If your circumstances change, you can lower or raise your payments accordingly or decide you no longer need our services. There is no binding contract.
Learn more about the benefits of Debt Management.
Learn more about Debt Management.
Should I Consider A Debt Consolidation Loan?
Maybe, but it depends on personal circumstances. Debt consolidation loans are usually best suited to someone who's in employment but struggling with repayments, but is otherwise financially mature enough to realise the advantages and disadvantages a debt consolidation loan can bring.
Advantages to Debt Consolidation
- The switch to a secured consolidation loan can potentially result in a lower rate of interest than your current unsecured credit.
- Chances are, you'll find that you are making a lower monthly payment.
- As you've consolidated your debts into a single loan, you only have one creditor.
Disadvantages to Debt Consolidation
- You may face early settlement charges on existing loans when you pay them off.
- You could face broker fees and commissions.
- The overall borrowing could be greater if the loan is spread over a longer period.
Debt Consolidation versus Debt Management
The main advantage of a debt consolidation loan over debt management is that all other debts are paid off without harming your creditor record. However, it's unlikely you'll be able to borrow much more than £5,000 without needing to secure it a against something, normally a property. If you manage to get such a loan, if you should then fall into further difficulties, you're not in a strong position to negotiate.
More Debt Consolidation Options
Remortgage with Equity Release
If you're a homeowner with a mortgage, you could seek to re-mortgage for more than is currently outstanding on your current mortgage. The released money can go towards your unsecured debts. The disadvantage of this debt consolidation solution is that it turns unsecured debt into secured debt. This increases the chance of repossession should you fall behind with mortgage payments.
Bankruptcy can free you from debt that you can't afford. But your assets can be sold off to pay creditors, so you could lose your home. Therefore bankruptcy should always be seen as a last resort.
*Declined credit applications leave a mark on your credit record. Making an enquiry here will not.