Representative Example: On an assumed loan amount of £750 over 12 months. Rate of interest 191.2% (fixed). Total repayment amount £1726.68 and total interest is £976.68. 12 monthly payments of £143.89. My Financial Broker is a broker, not a lender*.
* As a broker, we are unable to ascertain exactly how many customers take out a loan or the lender’s rate of interest particular to that customer, therefore our calculation is based on the mean APR of our panel of lenders.
Debt consolidation loans allow you to put all your existing credit cards, loans and other bills into one single loan that you can pay off each month and eventually become debt-free. Compared to paying lots of different debtors and trying to stay on top of it, it is far more convenient to pay these all into one place, on a date that is more suitable for you. You can also save money with a debt consolidation loan – as you’ll only be paying interest on one loan, rather than several, this could cost you less in the long run.
You can apply for a secured debt consolidation loan – for instance, if you have a property that you have equity in, you can release the funds to pay off your debts in one go. Alternatively, you can take out a loan secured against the value of something valuable, such as your home or car. You then simply pay off your debt consolidation loan and interest over the next few months or years.
My Financial Broker can help you get the best debt consolidation loan for help you pay off your outstanding debts. We work with multiple lenders in the UK and can offer a free quote online, with no impact to your credit score. To get started, simply click on the apply now button above, and fill in your details.
When Should You Consider Getting a Debt Consolidation Loan?
Taking out further credit when you already have open loans is something you should give a lot of thought. Before you take out a debt consolidation loan, you should therefore ask yourself the following questions:
- Will I be spending less money overall on my debts each month, or will I spend less in total?
- Are there any fees or charges with the debt consolidation loan, that will mean I don’t save money overall?
- Can I afford the debt consolidation loan repayments for the entire duration of the loan?
- Am I able to cut back on my spending alongside the debt consolidation loan, to get my finances back on track?
You should also make contingency plans, in case anything were to happen in the future that would stop you from making repayments. For example, how would you manage your finances if you were to lose your job, or if the interest rates of your loans went up? It can often be helpful to seek third party advice before taking out a debt consolidation loan too.
Debt Consolidation Features
There are two main types of debt consolidation loans – secured and unsecured. With a secured debt consolidation loan, the amount you borrow is secured against the value of an asset. This would typically be your home. The risk with secured loans is that you are at risk of losing your collateral if you’re unable to keep to the due repayments.
With an unsecured debt consolidation loan, you don’t have to worry about collateral, so your assets won’t be put at risk. The downside is that unsecured loans tend to have higher interest rates than secured loans. We’ve listed a few common features of both secured and unsecured debt consolidation loans below:
- Receive money upfront
- Consolidate all your debts into one single loan
- One single payment every month on a date you arrange
- Secured or unsecured options available
- Bad credit histories considered
- Low cost options available
- Repay over 1, 5, 10, 20 or 30 years
A key benefit of a debt consolidation loan is that you can receive the money upfront which can be used to pay off any existing debts immediately. This can be very useful to reduce the annoying letters and phone calls from existing debtors – and you can potentially save money by not having any added interest or late fees applied.
You can apply for an unsecured debt consolidation loan, which is based on your income and credit rating. As this is an unsecured loan, there is no security used, so there is no risk of having anything repossessed if you cannot keep up with payments.
However, most borrowers apply for a secured debt consolidation loan, which is secured against your car or home. This allows you to maximise the amount you need to borrow. Bear in mind though that your collateral is at risk if you default on payments. See secured loans for more information.
Types of Debts That You Can Clear
- Credit card bills
- Outstanding loans
- Car finance
- Utility bills
- Student loans
- Mortgage payments
Can I Apply for Debt Consolidation Loans for Bad Credit?
Yes, debt consolidation loans for poor credit are available! You can take any existing debts that you have, and consolidate them into one single, easier loan to pay off.
If you have a bad credit history, you will need a stable income through employment, and ideally some valuable collateral that can be used as security. For most consolidation loans, borrowers will secure the loan against their vehicle or home, allowing them to release money via equity. The lender will therefore have co-ownership of this asset for the loan duration, and if you are unable to keep up repayments, your collateral could be repossessed.
What Information Do I Need for a Debt Consolidation Loan?
- List of outstanding debts and the balances
- Proof of ownership (vehicle or home)
- Proof of income/employment
- Proof of address
- Valuation of vehicle or property
If you are interested in a secured debt consolidation loan, your home or vehicle will need to be valued appropriately. To be eligible, your asset must be in good condition and the newer the vehicle or property, the more you will be able to borrow.
How to Apply for Debt Consolidation With My Financial Broker?
Initially, to apply for a debt consolidation loan, we just need some basic details which can be filled in our online application form. This includes how much you wish to borrow, how long for and some basic details such as your name, age, address and income.
This will help us give you an indicative quote and provide you with a list of options from our panel of lenders. If you wish to proceed, you will undergo further checks and be required to provide the information mentioned above to one of our chosen lenders.
If you apply for an unsecured loan, your funds can often be transferred to your bank account in less than 48 hours. For a secured loan, this could take a little longer as you will need to have your information and asset valued beforehand. If you have information about your outstanding debts and your assets available, this will generally help speed up your application.
How Can My Financial Broker Help?
My Financial Broker can help you compare debt consolidation loans and find the best loan product to suit your requirements. We have over 25 years of experience and have made close partnerships with some of the biggest lenders in the UK. We will match your application with the best lender, and there are no fees for applying, not to mention no impact to your credit rating. Simply click on the apply now button below to get started.APPLY NOW