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A wise guide to…

Getting a Debt Consolidation loan

If you would like to get debt free sooner, it's worth considering a debt consolidation loan. This type of loan can save you money every month on your interest payments. With just one fixed payment it's much easier to keep your budget under control.

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Representative 49.7% APR (variable). Representative Example: If you borrow £2,600.00 over 36 months at a Representative rate of 49.7% APR and an annual interest rate of 41.00% (fixed), you would pay 36 monthly instalments of £126.61. The total charge for credit will be £1,957.89 and the total amount payable will be £4,557.89.
Choose Wisely is a trading style of Choose Wisely Limited and is a free to use price comparison website. Choose Wisely Limited is authorised and regulated by the Financial Conduct Authority as a credit broker not a lender, firm reference number 730574 and is registered with the Information Commissioner’s Office number Z3106681.

A quick, easy way to get a debt consolidation loan today.

  • Borrow from £300 to £10000.

  • Choose between lenders who have accepted your application.

  • Absolutely no fees, ever.

Representative 49.7% (variable).

How to get a debt consolidation loan in 3 simple steps.

Affordability assessment.

1 form - takes 2 minutes to complete and your data is 100% secure.

Compare products.

Choose from lenders that have accepted your application.

Speedy finance.

If approved, the cash can be in your account in as little as 15 minutes.[†]

Table of contents

Written by Mark Grimley
Read time: ~5 mins
Published: 4th April 2016 Updated: 30th July 2020

How do debt consolidation loans work?

This type of loan brings together all of your existing debts into a single loan with a lower interest rate and lower monthly repayments. You can bundle credit card, personal loan and store card debt into one simple payment which can make the whole process much easier to stay on top of.

Another benefit of this type of loan is that you make one single payment to one creditor each month, which simplifies the repayment process and can ease a huge amount of the stress associated with paying the monthly bills.

If you're struggling to keep up with your repayments, the range of debt consolidation loans UK lenders offer can provide a smart route to managing your finances. Just be careful to check the small print on your existing loans - there may be early repayment charges that you'll need to factor into your calculations.

If you choose to consolidate your debts into a single loan then make sure you:

  • Check the APR as well as the headline interest rate
  • Consider reducing your credit cards spending, or using credit cards altogether as they can bring you back into a cycle of multiple debts
  • Make sure you find the best deal for your individual financial circumstances. Choose Wisely offer a fast, secure application process with our Get Accepted application form.

When does a debt consolidation loan make sense?

It may sound obvious, but debt consolidation loans will typically only make sense if you can organise a way in which your monthly repayments could be lower than you are paying at present.

In this respect, consolidation can be a light at the end of the tunnel for anyone with multiple ongoing debts. It can help you to get back on track with your spending by clearing your debts more quickly. But it's only a good idea if you can keep up with the repayments until you've paid off the loan and any personal savings you make in the timeframe aren't wiped out by fees and charges.

A debt consolidation loan could make sense for you if your credit is good enough for an unsecured loan or a 0% credit card, but consolidating your debts isn't always the answer.

This type of loan doesn't make sense if:

  • You can't make the monthly repayments
  • You don't clear all your debts
  • Your debt is so large you need a debt advisor to arrange a repayment plan, not a loan

You also shouldn’t go into one if you face potential cash flow problems, or if you aren’t also taking other steps to prevent yourself from falling into debt again. While consolidating your debt can help ease the pressure, it isn’t always a magic pill.

What types of debt consolidation loans exist?

If you've decided to merge all your debts, there are two main types of loans available.

Secured loans are borrowed against your assets, usually your house. If you miss repayments on the loan then you risk losing your home. If your credit is poor or you have a large amount of debt, this is the type of loan you'll be offered. Always talk to a debt advisor before taking out a secured loan against your property.

Unsecured loans are not linked to your home, but can be more difficult to get if you have a poor credit history.

You can apply for a secured or unsecured loan from the following lenders:

  • Banks including high street banks or supermarkets
  • Peer to peer lenders
  • Guarantor loans
  • Online pawnbrokers
  • Logbook loans on cars under 10 years old

One thing to be wary of when going through this process is that you may see adverts or links to services advertised as 'Government consolidation loans’. These are in no way affiliated with the UK government and, despite the name, are never free or endorsed by an official body. They will charge for their services and often come with extremely poor repayment terms (if you see the money at all).

There are sure fire ways of avoiding these kinds of unscrupulous lenders.

Before you decide to take out a loan, you can check your debt consolidation loans eligibility with Choose Wisely’s Get Accepted application process. It won't affect your credit score and you'll have the peace of mind knowing that all lenders are authorised by the FCA and have to adhere to responsible lending guidelines. The best benefit is you’ll know exactly which lenders will accept your application before you apply.

Acceptance criteria will vary lender to lender but in general you'll need to be over 18, with a UK bank account. You must also be able to both set up a direct debit and demonstrate to lenders that you are able to keep up with your agreed repayments. The lender will work this out by carrying out an affordability assessment.

Who offers the best debt consolidation loans?

These lenders currently offer some of the best consolidation loans on the market, but to find out your full list of options, get started with Choose Wisely’s Get Accepted application process.

Lending Works

If you're looking to consolidate your debts, Lending Works offer flexible repayments across its peer-to-peer lending options, alongside low interest rates that can help you get out of debt fast.

Peer-to-peer networks like this connect lenders with multiple creditworthy borrowers. Lending Works offer low cost loans for borrowers looking to consolidate their debts.

About:

  • Peer-to-peer loan
  • Quotes won't impact your credit score
  • Quick and easy to apply

Shawbrook Bank

An unsecured loan form Shawbrook Bank can help you put all your debts in one place with lower monthly repayments. Shawbrook offers unsecured loans to UK residents aged 21 to 75 with an annual income of at least £15,000. Borrow between £1,000 and £35,000 at fixed interest rates that beat the high street. Loans can be repaid over one to seven years.

About:

  • Unsecured loan
  • Fixed interest rates
  • Longer repayment terms
  • Loans tailored to fit your circumstances
  • Instant quote won't affect your credit score

Evolution Money

A secured loan with Evolution Money allows you to pay off payday loans, store cards, mortgage arrears and other outstanding debt. They offer loan amounts from £5,000 to £50,000 paid back over 1 to 20 years.

About:

  • Secured loan
  • Consolidate a wide range of debt
  • Loans must be paid back by your 70th birthday

Should you consider a debt consolidation loan?

Advantages:

  • All your debts are in one place so you pay one interest rate and one repayment every month
  • Managing your debt and budgeting is more straightforward and easy to keep track of
  • You can improve your credit rating by making regular repayments
  • You can accept a fixed interest rate, which can make financial planning more straightforward
  • You could be offered a lower interest rate and lower monthly repayments
  • An unsecured loan doesn't put your property at risk
  • You'll have a clear end date to your debt

Disadvantages:

  • Your home could be repossessed if you fail to keep up your repayments
  • It can be difficult to get an unsecured loan if you have a poor credit rating
  • You may end up paying charges if you're in a position to pay the loan back early so always check the small print
  • It can cost you more in the long run because the loan is paid back over a longer time
  • You could end up paying a higher interest rate if you're consolidating credit card debt
  • It doesn't solve the problem of how you got into debt in the first place

Overall, there are definite advantages to debt consolidation loans for bad credit UK households, however they should be approached with caution.

Debt Consolidation Loans FAQ's

Do consolidation loans hurt your credit score?

Getting any loan might affect your credit score. When you ask a lender for a quote or apply through Choose Wisely, there will only be a ‘soft’ credit search. That means it won’t leave a footprint that’s visible to other lenders. Lenders only record a search if you decide to proceed with the loan application. Normally just before they give you a decision and you sign the loan agreement.

What is the interest rate on debt consolidation loans?

Interest rates differ with each lender but if you’re currently paying back multiple loans, consolidating your debt and paying one lender might be cheaper. Do keep in mind any fees and the new interest rate. Often you will be able to get financial advice or guidance from the lender, your bank or money advice service.

How do I compare debt consolidation loans?

1. Select the loan amount you need and the length of time you wish to pay it back over using the option on this page.

2. Click ‘Get Accepted’

3. Fill out the secure form.

4. Wait while we get responses from our carefully selected panel of lenders.

5. Compare prices and features from the list of the cheapest loans available from lenders that have accepted your application.

6. Click ‘Get This Loan’ to finalise your application directly with the lender

Written by
Mark Grimley
Head of Partnerships & Take Control Author at Choose Wisely

Mark joined Choose Wisely in 2015. He continues to work in close contact with the providers, brokers and journalists operating in the world of consumer credit.

The quickest way to find the best debt consolidation loan for you.

No obligation. 100% secure.

Important Information.

All of the information in this guide is correct at the time of writing.

Rates shown are quotes based on your personal circumstances, are subject to status and are available to those aged 18 and over. Rates available range from a minimum of 3.9%APR to a maximum of 1575%APR Representative and loan repayment periods range from 3 to 60 months.

[*][†] Once accepted, your loan can be transferred to you in as little as 15 minutes. The time that it takes for the loan to show in your bank account will depend on your lender and your bank.

If you need financial advice you can visit stepchange, speak to citizens advice, call the national debtline or speak to moneyadviceservice.org.uk.

If you've been declined, please refer to your credit report to gain an understanding of why before making further applications.
Your score can be accessed for free via any of the main credit reference agencies such as Credit Karma, Clearscore or Experian.

Warning: Late repayment can cause you serious money problems. For help, go to moneyadviceservice.org.uk