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Debt consolidation is where you combine several smaller debts into one larger one.
With a debt consolidation loan, you borrow the total amount your debts come to, and use the loan to pay them off. You then pay off the loan in monthly instalments.
There are a few benefits to this:
It’s easier to manage, as you’ll only have one payment to make each month, rather than several.
It can be cheaper if you’re paying high interest on several small debts. This isn’t always the case though, so make sure you know what you’re paying before you jump in.
Add up your existing debts and see how much you owe in total.
Compare quotes for this amount, and then choose a lender to go with.
Use the loan money to pay off your other debts, and then repay the loan.
If you have debt spread over several accounts, then a debt consolidation loan could work for you.
But they do come with drawbacks, so it’s important to consider the pros and cons before taking one out.
To help you decide, here are some things to think about:
Tell us your monthly budget or how much you’re looking to borrow and over how long, and we’ll show you an example of what your repayments could be.
A debt consolidation loan can be used to help pay off almost any debt.
They’re commonly taken out to cover:
Credit cards
Payday loans
Overdrafts
Store cards
Personal loans
No, comparing loans with us won't hurt your credit score.
When you get a quote, our partner Monevo will check your credit information via what’s known as a ‘soft credit check’.
Soft credit checks don't affect your credit score and won’t show up on your credit report.
By allowing Monevo to do this, you’ll be able to see exactly what loans you’re eligible for, without affecting your score.
When you compare loans, you’ll see a figure next to the prices you’re quoted. This is known as an annual percentage rate, or APR. It’s the amount you’ll pay in interest and charges each year on top of the amount you’re borrowing. It’s given as a percentage. A 10% APR means you’ll pay 10% of your remaining loan amount in charges each year.
Comparing quotes won't affect your credit score, but applying for a loan might. Once you've picked one of the deals we've found for you, you'll be directed to your lender's site to finish applying. During this process, they'll perform a hard credit check on you. These appear on your credit report and can affect your score, so keep this in mind.
This is the length of time you’re borrowing for. It can affect how much you pay in interest, so it’s crucial you consider it. For example, while an APR of 10% over 5 years might sound better than 15% over 2 years, it’s likely you’d end up paying more in interest over the course of the 5 year loan than you would during the 2 year one.
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