How Can I Consolidate My Debts?

You could consolidate your debts with a debt consolidation loan. This is where you take out a new loan to pay off multiple existing debts – such as personal loans or credit cards.

With a debt consolidation loan, you pay off a single loan to a single creditor instead of making multiple payments to multiple creditors. This could help you manage your finances, as you only have one monthly payment to make.

You may also end up paying less interest on a debt consolidation loan compared with other types of finance (eg credit cards). If you are thinking of consolidating existing borrowing, you should be aware that you may be extending the terms of the debt and increasing the total amount you repay.

• One payment per month instead of many – could help you manage monthly outgoings
• Interest rates can be lower than other types of credit – like credit cards
• Lower interest rates mean more of your monthly payment goes toward paying off the outstanding balance
• This could help you clear your debts faster

A secured loan may be a suitable option if you want to consolidate debt. This is where a house or other asset acts as security on the loan. This reduces the risk to lenders, which could improve your chances of approval – even if you have bad credit.

A debt consolidation loan could even help you improve your credit rating -keeping up with a single payment each month could demonstrate good payment history.

Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up the repayments on a mortgage or any other debt secured it.
Late payment can cause you serious money problems.

How do debt consolidation loans work?

Is debt consolidation good or bad for my credit?

Can I get a loan with bad credit?