A debt consolidation loan is an option if you have a lot of different debts and struggling to keep up with the repayments. With debt consolidation, you can merge all of your repayments together into one loan and lower the monthly payments. You can borrow enough money to pay all of your current debts and owe money to just one lender.
What are the different types of loans?
A secured loan is when debt is secured against a property. This is a bit like taking out another mortgage. If the loan cannot be paid back, the loan company could sell the property. Due to this we would say to make sure you can afford to repay the loan before you make an agreement.
A secured loan is usually cheaper than an unsecured loan due to the lender being able to sell your assets if you don’t keep up with your repayments.
This is also known as a personal loan. Difficulty keeping up with your repayments will affect your credit rating, but the loan company cannot repossess your home. They could however take you to court for non payment which could incur extra costs.
How can I get a debt consolidation loan?
If you choose a debt consolidation loan, it is highly advised that you ‘shop around’ using comparison websites to find the best deal. It is also advised seeking additional advice before making a final decision as other solutions may be much more suitable - we can help you with this. Make sure you compare the APR (Annual Percentage Rate) or the APRC for secured loans as this will include additional costs such as an arrangement fee.
Fees and charges for debt consolidation
When does a debt consolidation loan not make sense?
For help with debt, speak to our friendly One Money team of specialist advisers on 0330 355 1000 or email firstname.lastname@example.org