Debt consolidation loans can help you manage your existing debts by combining them into one loan with one rate and one repayment amount.
Loans displayed from 26 companies have term lengths between minimum 6 months and maximum 10 years and maximum 49.9% APR.
Warning: Late repayments can cause you serious money problems. For more information see our debt help guides.
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If you have debts, then borrowing more money might seem counterintuitive, but there are good reasons (as well as risks) for considering a debt consolidation loan.
Managing debts from more than one lender can be tricky, especially if you're paying a high rate of interest. A debt consolidation loan, as the name suggests, can help consolidate all of your debts into one loan.
That loan would be used to help to pay off all of your debts and treat it as one debt, instead of several. As a result, there would only be one monthly repayment to manage, rather than many.
But convenience isn't the only reason to use a debt consolidation loan. Some loans offer lower rates than what you might be paying back on all of your credit card bills and other debts. Read on to learn how debt consolidation loans can help you.
There are obviously risks in taking out any kind of credit product, but if you are already in debt, then taking out an additional loan can potentially have a much larger impact on your finances.
Most importantly, a debt consolidation should never be the first option you look at if you do have debts. The priority should be to first assess what you can do to manage your outgoings and plan to repay your debts on time.
With a debt consolidation loan there is also the risk of paying debts for much longer than you need to, so it's worth looking at the long-term situation. For example, how long would you need to realistically pay off all of your debts if they were consolidated into one loan?
Finally, if you do decide to take out a debt consolidation loan, then do not continue to spend on the credit cards which you have consolidated, as you'll end up back at square one.
When you do decide to take out a debt consolidation loan, then make sure you have a budget worked out for all your day-to-day spending, so that you minimise the need to take out any extra credit.
The rate advertised is subject to your application and status according to the provider, so you're not guaranteed to get the headline rate.
With that in mind, don't base all of your future debt management plans on the rate you find advertised. The lender will look at your circumstances, the amount you want to borrow, how long you want to borrow for, and your credit score to help decide if your application will be approved or declined.
The smaller your debts and the better your credit rating, the more chance you have of getting a loan, so if there's anything you can do to improve your situation prior to applying then be sure to do so. For example, getting yourself on the electoral register at your current address will improve your credit score.
Getting declined for a loan will show up on your application and could affect your score, so do check the details of the loan and if your circumstances generally fit the eligibility criteria.
Meeting the minimum eligibility criteria is no guarantee of approval for a debt consolidation loans, but there certainly isn't any point applying if you don't meet all of the minimum criteria.
Read more about Debt consolidation loans in our uSwitch loan guides.