Debt Consolidation Loans
Bring a few smaller debts together into one monthly repayment.
If you are juggling several small debts – a credit card, a gas bill, car insurance paid by the month – swapping them for one loan means a single repayment, to one lender, on the same date each month. It isn't the right move for everyone, so this page sets out the advantages and the catches side by side.
Representative Example: Borrowing £1,500 over 11 months at £169.69 a month. Total amount repayable £1,866.59. Interest £366.59. Interest rate 46% pa (fixed). Representative 57.1% APR. Rates range from 22.3% APR to 112.5% APR depending on your circumstances. Quick Loans Ltd is a credit broker, not a lender. Warning: Late repayment can cause you serious money problems. For free, impartial help, visit MoneyHelper.
Several Payments Into One
Before
- Credit card – its own due date and interest rate
- Gas or electricity bill – a balance that has built up
- Car insurance – a monthly instalment plan
- Home insurance – yet another date to remember
After
- One loan, one lender
- One fixed repayment on one date
- A set date when it is fully paid off
For illustration only – there are no figures here because every situation is different.
Is It Right For You?
✓ It may help if…
- you can comfortably afford the new monthly repayment
- the new loan's rate is lower than what you are paying now, or a single simple payment matters more to you than the cost
- you will close the cleared accounts, or lower their limits
- your debts are small enough to clear with one loan of up to £3,500
✗ Think twice if…
- you are already missing payments – speak to a free debt adviser first
- the new loan's rate is higher than the debts you would be clearing
- you might be tempted to use the cleared cards again
- spreading the debt over a longer time means paying more interest overall
What To Watch Out For
A longer term can cost more
Even at a lower rate, paying a debt off over a longer period can mean more interest in total. Compare the total amount repayable on the new loan with what you would pay by clearing your current debts as planned.
Don't refill the old debts
The biggest risk is clearing a card and then using it again, leaving you with the new loan and the old balance. Closing cleared accounts, or reducing their limits, takes that temptation away.
Check what you are clearing
Before you pay anything off, ask each provider for an up-to-date settlement figure and whether any charges apply, so you borrow the right amount and nothing is left behind.
Struggling With Debt?
If you are already behind on payments, or your debts feel out of control, a new loan may not be the answer. Free, confidential help is available from organisations that never charge you a penny:
- MoneyHelper – free, impartial money guidance backed by the government
- StepChange – a debt charity offering free advice and plans
- National Debtline – a free advice service you can reach by phone, webchat or online
What Our Lenders Look For
Debt consolidation is one of the reasons you can choose on our application form, and lenders on our panel consider these applications. As with any loan, the decision comes down to whether the new monthly repayment is affordable for you.
The debts our customers most often bring together are smaller ones: credit cards with limits of £2,000 or less, gas and other utility bills, car and home insurance paid monthly, and council tax arrears. If you have fallen behind with council tax, energy or another household bill, please speak to a free adviser before you apply. These are priority bills, because falling behind can have serious consequences, and your council or supplier can often agree a payment plan you can afford without any new borrowing.
How Much Can I Borrow?
Loans through Quick Loans run from £100 to £3,500, repaid over three months to three years, so they suit tidying up a handful of smaller debts rather than large ones.
On this website, a typical debt consolidation request is for £2,000 to £3,000, repaid over 18 months.
Debt Consolidation Questions
Will a debt consolidation loan improve my credit score?
It can help over time, if every repayment is made on time and the accounts you clear stay under control. It won't help if the old cards are used again. Checking your options with us uses a soft search, which leaves your credit score untouched.
Is a consolidation loan the same as a debt management plan?
No. A debt management plan is arranged with a debt adviser, who agrees reduced payments with the people you owe. A consolidation loan is new borrowing that you use to clear existing debts, and you then repay the loan. If you are struggling to keep up with payments, a free adviser can tell you which option suits you.
Can I consolidate debts if I have bad credit?
Possibly. Some of our lenders consider applicants with missed payments or CCJs. Our loans for people with a poor credit history page explains what lenders look at.
Can I just borrow a personal loan instead?
A debt consolidation loan is a personal loan used for a particular purpose. The application is the same – it's how you use the money that makes it a consolidation loan.