Debt Consolidation Loans
The cost of living can be expensive and debt can quickly build up. It can be a struggle trying to manage different payments to different people, and it can sometimes feel as if you’ll never pay off what you owe.
A debt consolidation loan can help by paying off your existing debt, reducing your outgoings, and leaving you with one simple, affordable payment, often at a lower interest rate.
Debt consolidation works – but it’s not right for everyone. Speak to one of our experts, who will make sure you get the best advice.
Ways to contact us
Simply put, debt consolidation is where you take out a loan to pay off several debts. The loan is then shared out between the people you owe money to (your creditors), and they are paid off in full. The debt you owe them is now closed (a debt that has been closed down is often referred to as being “settled”). This means that it has essentially been repaid.
Now, rather than having to pay different creditors different amounts, at different times of the month, you just have the debt consolidation loan to pay back – one payment, to one lender, once a month.
This is one of the main benefits of debt consolidation – it makes things a lot easier to manage. It can often reduce your outgoings too, giving you some more disposable income and more importantly, a chance to build up some savings, get back on your feet and start living again.
Almost any debt can be paid off with a debt consolidation loan – we’ve helped customers pay off credit cards, store cards, personal loans, mail order accounts, and car finance, as well as tax bills, County Court Judgements (CCJs) and utilities arrears.
Glad you asked – as we said before, although it helps many people, debt consolidation isn’t right for everyone and it does carry some risks:
- You’ll be replacing unsecured debt with a loan that is now secured on your property. As with any other secured loan or mortgage, you home may be at risk if you don’t maintain the payments.
- By taking out a debt consolidation loan, you may increase the length of time the debt is to be repaid, and therefore end up paying back more overall.
Sometimes, there are other options for dealing with debt – such as speaking directly to your creditors and asking them to reduce your payments and freeze interest and charges, or speaking to a debt management company. These options carry their own risks – such as potentially affecting your credit profile – but they may be more suitable for you than a debt consolidation loan.
Our expert advisers will carefully consider your situation and assess whether or not a debt consolidation loan is right for you.
It depends on the lender. Some lenders will write cheques for you to send to your creditors, others will pay your creditors directly via bank transfer, and some others will expect you to pay your creditors yourself once they have given you funds. Once the loan is arranged, our case managers will make you aware of exactly what you have to do and will help you through the process.
Representative example: If you borrow £26,000 over 10 years, initially on a fixed rate at 5.05% and for the remaining 5 years on the lenders standard variable rate of 4.65%, you will make 60 monthly payments of £310.37 and 60 monthly payments of £307.37. The total amount of credit is £29,195; the total repayable would be £37,245 (this includes a lender fee of £595 and a broker fee of £2600). The overall cost for comparison is 7.90% APRC.