Exploring Debt Consolidation Options

Consolidating debt means combining multiple outstanding debts – such as credit cards, personal loans, overdrafts, or payday loans – into a single loan with one monthly payment.

This approach simplifies your finances by reducing the number of payments you need to manage, potentially lowering your overall interest rate and making it easier to stay on top of your financial commitments.

Debt consolidation loan

A debt consolidation loan involves taking out a new loan to pay off your existing debts. The key benefit is that you’ll have a repayment plan that works for you.

At Evolution Money, we offer secured debt consolidation loans ranging from £5,000 to £100,000, with repayment terms between 3 and 20 years. These loans are secured against your home, which may improve your chances of approval, even if you have a less-than-perfect credit history. Your home may be repossessed if you do not keep up repayments on your mortgage or other debts secured on it.

We consider your full circumstances to determine eligibility. To get started, you can check your eligibility online without affecting your credit score.

Balance transfer credit cards

This type of credit card allows you to transfer your existing credit card balances onto one card, often with a 0% interest rate for an introductory period.

If you can pay off the transferred balance during the interest-free period, you can save a considerable amount of money on interest.

Balance transfer cards may come with fees, and if you don’t repay the balance during the 0% period, a higher interest rate may apply.

Home equity loan/Home equity line of credit (HELOC)

If you own a home, you may be able to use the equity in your property to consolidate your debts. A home equity loan offers a lump sum at a fixed interest rate, while a HELOC works like a credit card with a variable interest rate.

Those who have limited or negative equity could consider our low-equity loans. This means you could still be eligible to borrow up to £100,000, depending on your individual circumstances. All applications are subject to affordability checks and property eligibility.

Unlike mainstream lenders, we consider more than just your equity and take a holistic view of your financial situation to find a helpful solution.

Debt management plan

This is a repayment plan arranged through a credit counselling agency, which works with your creditors to reduce interest rates and create a more manageable repayment schedule.

While the plan doesn’t involve taking out a loan, it consolidates your payments into one monthly payment made to the agency, which then distributes it to your creditors.

It’s important to consider whether debt consolidation is the right choice for you. Some key advantages include:

• Simplified payments: Instead of dealing with multiple creditors and due dates, debt consolidation reduces your debts into one manageable payment. This makes it easier to keep track of your finances and reduces the likelihood of missed payments.
• Potential savings on interest: If you qualify for a lower interest rate through consolidation, you could end up paying less overall.
• Improved cash flow: Lowering your monthly payments or extending the repayment term might free up money for other expenses or savings.
• Stress reduction: With fewer payments to track and fewer creditors to communicate with, you might find a reduction in the stress caused by debt.

Consolidating debt through a secured loan can be an effective way to simplify your finances, but it’s essential to be aware of the potential risks and considerations involved.

• Extending the term of your debt: In some cases, consolidating debt can result in a longer repayment period. While this might lower monthly payments, it could also mean paying more interest over time.
• Accumulating more debt: If you don’t adjust your spending habits, it’s easy to fall into the trap of racking up new debt while still repaying your consolidated loan.
• Impact on credit score: Applying for a secured loan usually involves a hard credit inquiry, which can cause a temporary dip in your credit score. If you manage the loan responsibly by making timely repayments, it could positively impact your credit score over time.At Evolution Money, we carry out a soft credit check when assessing eligibility, which doesn’t impact your credit score. If your loan goes ahead and is funded, a hard credit search will be added to your credit file.
• Fees and costs: Some consolidation options, such as balance transfers or home equity loans, often come with fees that can add to the cost of consolidating your debt.

Choosing the right option depends on your financial situation and goals. If you’re a homeowner with significant unsecured debt, a secured debt consolidation loan may be worth considering if it’s affordable for you and appropriate for your situation.

For those with manageable credit card debt, a 0% balance transfer credit card could provide temporary relief. Alternatively, remortgaging may be appropriate for homeowners with substantial equity.

If you’re struggling with multiple debts and seeking a structured repayment plan, a debt management plan or an individual voluntary arrangement might be a suitable option.

Unsure or worried about your debt? It may be helpful to speak to a specialist debt advisor who can guide you towards the option that aligns best with your circumstances.

Charities such as StepChange and National Debtline provide free, confidential advice and can assist you in exploring all avenues.

If you’re looking to consolidate your debts, an Evolution Money loan could help you combine everything into one easy monthly payment. We make it simple to deal with just one lender, offering debt consolidation loans ranging from £5,000 to £100,000.

As a Financial Conduct Authority-regulated lender with an ‘Excellent’ rating on Feefo, we’re committed to providing you with reliable and trustworthy service.

To get started, check your eligibility with us today. If you’re a homeowner between the ages of 21 and 70 and live in the UK, we may be able to assist you. You can also learn more tips and guides in our help and advice hub to find out more ways to manage your finances.