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Debt Consolidation Loans

3 min read
January 2, 2026

What is debt consolidation?

Debt consolidation involves moving some/all of your existing debt across multiple accounts into 1 account by paying off or closing old accounts with credit from the new account.

Can you get a loan for consolidated debts?

Yes, if you meet the lender’s requirements. They will look at your application and credit report and decide how much to lend you and what interest rate to charge.

There are several websites where you can compare debt consolidation loans by inputting your financial information, including some which won’t affect your credit score.

Debt consolidation loans can pay off some or all of your existing debts – you then pay the loan off (and interest) rather than multiple debts. This also means that you have just 1 regular monthly payment to track.

If you’re thinking about getting a loan, work out how much you’ll need to pay off your existing creditors, then you can apply for a loan for that amount.

What if I have bad credit?

You may still be able to get a debt consolidation loan if you have bad credit. Secured loans against an asset such as your house or car can be used as collateral to reduce risk for the lender; you may be more likely to get approval for secured rather than personal loans, therefore.

Consider this action carefully, however, as you may lose the asset if you don’t keep up with repayments.

Does debt consolidation save you money?

While moving your credits into a singular account won’t remove any debt, the interest repayments may be lower than your combined multiple accounts.

1 regular payment also allows you to manage your finances more easily and budget for the outgoing loan.

How much will it cost me?

There may be a set-up fee which is charged at a percentage of the borrowing amount. The total loan amount may have a lower interest rate than your existing credit accounts, however it may take a longer time to pay off the loan in full, which means you’ll pay more interest over time.

Be aware that closing old accounts and applying for a loan, even if you get rejected, may negatively impact your credit score.

Pros and cons of debt consolidation loans:

Benefits:

  • Budgeting made simple: 1 monthly payment on the same date each month instead of multiple payments and interest rates makes financial planning easier.
  • Financial clarity: you’ll see your debt in 1 place, with a clear statement of what you have paid and have yet to pay.
  • Lower interest payments: you may be able to get a lower interest rate on your loan.

Disadvantages:

  • You could damage your credit score if you don’t make your monthly payments in full and on time.
  • Existing lenders may charge you a fee if you close your accounts and end your credit payments early.
  • If you take out a secured loan and fail to meet your monthly payments, you could lose the asset it’s secured against (such as your car or home).
Speak to us about your financial circumstances if you’re thinking about consolidating your debts.
We’ll go above and beyond to find the best solution for you.
Contact us

Source: https://www.experian.co.uk/consumer/loans/guides/debt-consolidation.html

Think carefully before securing other debts against your home. The overall cost of repayment of other debts might be more when added to your mortgage. Your home might be repossessed if you do not keep up repayments on your mortgage

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