Debt Consolidation Loan
A debt consolidation loan is one way of combining multiple debts into a single monthly payment. Consolidating debt helps some people pay off credit cards, store cards and personal loans in a more manageable way.
Debt consolidation falls under debt refinancing. Refinancing involves taking out new credit to cover older debts. There’s no debt forgiveness – you’re paying back your debt in full, and it might actually cost you extra.
Debt Consolidation Loan
The decision to take out a debt consolidation loan isn’t one that should be taken lightly. It can affect your finances for years to come.
That’s why we strongly recommend you speak to a debt advisor to discuss alternatives and understand all the risks involved in the process.
Benefits of a Debt Consolidation Loan
What are the benefits of a Debt Consolidation Loan? We’ve compiled a handy list of the main points below, click a heading to read more.
Better Value Borrowing
Paying a lower rate of interest – longer-term consolidation loans may be better value than short-term borrowing.
Lower Monthly Payments
Your monthly payments might be lower.
Defined Payment End Date
Knowing when you’ll finish paying off the debt.
Single Monthly Payment
You only have to make a single payment each month.
Deal With One Lender Only
You only deal with one lender.
Protect Your Credit Rating
It may stop you falling behind on payments and getting a bad credit rating.
Risks of a Debt Consolidation Loan
What are the risks with a Debt Consolidation Loan? We’ve identified and listed some of the main drawbacks below, click a heading to read more.
Property May Be At Risk
If the loan is secured against your home, your property will be at risk of repossession if you can’t keep up your payments.
Are You Paying More?
You could end up paying more overall and over a longer period.
Extra Charges Incurred
You usually pay extra charges for setting up and repaying the new loan.
All Eggs In One Basket
All your eggs will be in one basket – if you get into difficulties, it may be more difficult to come to a new arrangement with a single lender.
Possible High Interest Rate
If you have a poor credit rating, you may only be able to get a loan at a high interest rate or secured against your home.
Struggle To Make Payments
If you don’t pay off all your existing debts, you may struggle to make the payments on top of the new loan.
The Debt Centre Provide Friendly Debt Help and Practical Solutions
We treat every customer as an individual and our support is tailored to your personal circumstances, ensuring your best interests are central to our ethos.
We will run through all the options available to you and then we will guide you through the next steps of the process.
We define ourselves by our values as a business. These values inform the way treat our customers and our staff.
Recent Case Studies
Kevin
Aged 38, Lives in Birmingham, 7 Debts.
Debt level: £24,450
Monthly payments before IVA: £560
Monthly payments after IVA: £150
Mischa
Aged 27, Lives in Oxford, 8 Debts.
Debt level: £15,900
Monthly payments before IVA: £355
Monthly payments after IVA: £110
Aamil
Aged 57, Lives in Leeds, 6 Debts.
Debt level: £8,200
Monthly payments before IVA: £240
Monthly payments after IVA: £90
Figures in these examples relate to actual customers of The Debt Centre who were undergoing a debt solution with one of our providers between October 2022 and June 2024.
Each customer has consented for their story to be published on our website, although names and pictures may have been changed to respect our customers anonymity.
Practical Debt Management Solutions
Individual Voluntary Arrangement (IVA)
Debt Management Plan (DMP)
Trust Deed
Debt Relief Order
Debt Consolidation Loan
Bankruptcy
