{"id":68,"date":"2025-08-21T08:28:55","date_gmt":"2025-08-21T07:28:55","guid":{"rendered":"https:\/\/www.loanchester.co.uk\/guide\/?p=68"},"modified":"2026-09-12T06:11:47","modified_gmt":"2026-09-12T05:11:47","slug":"what-are-debt-consolidation-loans-in-the-uk","status":"publish","type":"post","link":"https:\/\/www.loanchester.co.uk\/guide\/what-are-debt-consolidation-loans-in-the-uk\/","title":{"rendered":"Debt Consolidation Loans UK: How They Work &#038; What to Consider"},"content":{"rendered":"<p><span data-contrast=\"auto\">Managing multiple loans can be challenging. Missing payments not only hurts your credit score but also causes the debt to snowball. Reeling under the pressure of insurmountable debt, borrowers tend to consider several options. Consolidation is among them.\u00a0<\/span><span data-ccp-props=\"{&quot;335559685&quot;:1134,&quot;335559737&quot;:1230}\">\u00a0<\/span><\/p>\n<p aria-level=\"1\"><strong>What Is a Debt Consolidation Loan?\u00a0<\/strong><\/p>\n<p><span data-contrast=\"auto\">A debt consolidation loan is a personal loan that you take out to pay off your existing debts once and for all so that you are left with only one debt to pay off over an extended period of time. <\/span><span data-ccp-props=\"{&quot;335559685&quot;:1134,&quot;335559737&quot;:1230}\">\u00a0<\/span><\/p>\n<p><b><span data-contrast=\"auto\">How does a consolidation loan work?<\/span><\/b><span data-ccp-props=\"{&quot;335559685&quot;:1134,&quot;335559737&quot;:1230}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">Suppose you have a \u00a31,000 payday loan, a \u00a32,000 bad credit loan and a \u00a31,000 outstanding medical bill. Being on a thin budget, you are facing difficulty repaying them on time.\u00a0<\/span><span data-ccp-props=\"{&quot;335559685&quot;:1134,&quot;335559737&quot;:1230}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">Fearing the risk of rollover due to the missed repayment, you decide to take out a <a href=\"https:\/\/www.loanchester.co.uk\/personal-loans.php\">personal loan<\/a> of \u00a34,000 to discharge all your existing debts in full. You still owe the same amount, but the repayment schedule is different. Before consolidation, \u00a34,000 had to be paid back in a lump sum, but now the personal loan has spread the cost.\u00a0<\/span><span data-ccp-props=\"{&quot;335559685&quot;:1134,&quot;335559737&quot;:1230}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">Consolidation combines various types of loans, including credit cards, but not mortgages. Since this method spreads the cost, budgeting makes payments easier. <\/span>Debt consolidation loans in the UK <span data-contrast=\"auto\">can be secured and unsecured.\u00a0<\/span><span data-ccp-props=\"{&quot;335559685&quot;:1134,&quot;335559737&quot;:1230}\">\u00a0<\/span><\/p>\n<p><b><span data-contrast=\"auto\">Debts you can consolidate<\/span><\/b><span data-ccp-props=\"{&quot;335559685&quot;:1134,&quot;335559737&quot;:1230}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">The following are the types of loans that you can consolidate through a personal loan:<\/span><span data-ccp-props=\"{&quot;335559685&quot;:1134,&quot;335559737&quot;:1230}\">\u00a0<\/span><\/p>\n<ul>\n<li aria-setsize=\"-1\" data-leveltext=\"\uf0a7\" data-font=\"Wingdings\" data-listid=\"2\" data-list-defn-props=\"{&quot;335552541&quot;:1,&quot;335559685&quot;:1854,&quot;335559991&quot;:360,&quot;469769226&quot;:&quot;Wingdings&quot;,&quot;469769242&quot;:[9642],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;\uf0a7&quot;,&quot;469777815&quot;:&quot;hybridMultilevel&quot;}\" data-aria-posinset=\"1\" data-aria-level=\"1\"><span data-contrast=\"auto\">Store cards<\/span><span data-ccp-props=\"{&quot;335559737&quot;:1230}\">\u00a0<\/span><\/li>\n<\/ul>\n<ul>\n<li aria-setsize=\"-1\" data-leveltext=\"\uf0a7\" data-font=\"Wingdings\" data-listid=\"2\" data-list-defn-props=\"{&quot;335552541&quot;:1,&quot;335559685&quot;:1854,&quot;335559991&quot;:360,&quot;469769226&quot;:&quot;Wingdings&quot;,&quot;469769242&quot;:[9642],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;\uf0a7&quot;,&quot;469777815&quot;:&quot;hybridMultilevel&quot;}\" data-aria-posinset=\"2\" data-aria-level=\"1\"><span data-contrast=\"auto\">Credit card debt<\/span><span data-ccp-props=\"{&quot;335559737&quot;:1230}\">\u00a0<\/span><\/li>\n<\/ul>\n<ul>\n<li aria-setsize=\"-1\" data-leveltext=\"\uf0a7\" data-font=\"Wingdings\" data-listid=\"2\" data-list-defn-props=\"{&quot;335552541&quot;:1,&quot;335559685&quot;:1854,&quot;335559991&quot;:360,&quot;469769226&quot;:&quot;Wingdings&quot;,&quot;469769242&quot;:[9642],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;\uf0a7&quot;,&quot;469777815&quot;:&quot;hybridMultilevel&quot;}\" data-aria-posinset=\"3\" data-aria-level=\"1\"><a href=\"https:\/\/www.loanchester.co.uk\/emergency-loans.php\"><span data-contrast=\"auto\">Small emergency loans<\/span><\/a><span data-ccp-props=\"{&quot;335559737&quot;:1230}\">\u00a0<\/span><\/li>\n<\/ul>\n<ul>\n<li aria-setsize=\"-1\" data-leveltext=\"\uf0a7\" data-font=\"Wingdings\" data-listid=\"2\" data-list-defn-props=\"{&quot;335552541&quot;:1,&quot;335559685&quot;:1854,&quot;335559991&quot;:360,&quot;469769226&quot;:&quot;Wingdings&quot;,&quot;469769242&quot;:[9642],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;\uf0a7&quot;,&quot;469777815&quot;:&quot;hybridMultilevel&quot;}\" data-aria-posinset=\"4\" data-aria-level=\"1\"><span data-contrast=\"auto\">Overdrafts<\/span><span data-ccp-props=\"{&quot;335559737&quot;:1230}\">\u00a0<\/span><\/li>\n<\/ul>\n<ul>\n<li aria-setsize=\"-1\" data-leveltext=\"\uf0a7\" data-font=\"Wingdings\" data-listid=\"2\" data-list-defn-props=\"{&quot;335552541&quot;:1,&quot;335559685&quot;:1854,&quot;335559991&quot;:360,&quot;469769226&quot;:&quot;Wingdings&quot;,&quot;469769242&quot;:[9642],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;\uf0a7&quot;,&quot;469777815&quot;:&quot;hybridMultilevel&quot;}\" data-aria-posinset=\"5\" data-aria-level=\"1\"><span data-contrast=\"auto\">Payday loans<\/span><span data-ccp-props=\"{&quot;335559737&quot;:1230}\">\u00a0<\/span><\/li>\n<\/ul>\n<ul>\n<li aria-setsize=\"-1\" data-leveltext=\"\uf0a7\" data-font=\"Wingdings\" data-listid=\"2\" data-list-defn-props=\"{&quot;335552541&quot;:1,&quot;335559685&quot;:1854,&quot;335559991&quot;:360,&quot;469769226&quot;:&quot;Wingdings&quot;,&quot;469769242&quot;:[9642],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;\uf0a7&quot;,&quot;469777815&quot;:&quot;hybridMultilevel&quot;}\" data-aria-posinset=\"6\" data-aria-level=\"1\"><a href=\"https:\/\/www.loanchester.co.uk\/unsecured-loans.php\"><span data-contrast=\"auto\">Unsecured loans<\/span><\/a><span data-ccp-props=\"{&quot;335559737&quot;:1230}\">\u00a0<\/span><\/li>\n<\/ul>\n<p aria-level=\"1\"><strong>What are the benefits and risks of debt consolidation?\u00a0<\/strong><\/p>\n<p><span data-contrast=\"auto\">There are several advantages and limitations of debt consolidation:<\/span><span data-ccp-props=\"{&quot;335559685&quot;:1134,&quot;335559737&quot;:1230}\">\u00a0<\/span><\/p>\n<table data-tablestyle=\"MsoTableGrid\" data-tablelook=\"1184\" aria-rowcount=\"4\" aria-colcount=\"2\">\n<tbody>\n<tr aria-rowindex=\"1\">\n<td data-celllook=\"0\"><b><span data-contrast=\"auto\">Benefits\u00a0<\/span><\/b><span data-ccp-props=\"{&quot;335551550&quot;:2,&quot;335551620&quot;:2,&quot;335559737&quot;:1230}\">\u00a0<\/span><\/td>\n<td data-celllook=\"0\"><b><span data-contrast=\"auto\">Limitations<\/span><\/b><span data-ccp-props=\"{&quot;335551550&quot;:2,&quot;335551620&quot;:2,&quot;335559737&quot;:1230}\">\u00a0<\/span><\/td>\n<\/tr>\n<tr aria-rowindex=\"2\">\n<td data-celllook=\"0\"><span data-contrast=\"auto\">Consolidation simplifies budgeting. Instead of juggling multiple payments, you make only one fixed monthly payment.\u00a0<\/span><span data-ccp-props=\"{&quot;335559737&quot;:11}\">\u00a0<\/span><\/td>\n<td data-celllook=\"0\"><span data-contrast=\"auto\">Failing to meet your obligation on time will damage your credit score, lowering your chances of borrowing money at affordable rates down the line.<\/span><span data-ccp-props=\"{}\">\u00a0<\/span><\/td>\n<\/tr>\n<tr aria-rowindex=\"3\">\n<td data-celllook=\"0\"><span data-contrast=\"auto\">You will have a clear view of how much you owe, how much interest you will pay and how long it will take to discharge the whole debt.\u00a0<\/span><span data-ccp-props=\"{&quot;335559737&quot;:11}\">\u00a0<\/span><\/td>\n<td data-celllook=\"0\"><span data-contrast=\"auto\">Consolidation fees will increase the cost of the debt. Non-payment can result in a loss of your house if your house secures it.\u00a0<\/span><span data-ccp-props=\"{}\">\u00a0<\/span><\/td>\n<\/tr>\n<tr aria-rowindex=\"4\">\n<td data-celllook=\"0\"><span data-contrast=\"auto\">You will save money on interest if you qualify for lower interest rates. You will need a good credit rating to secure attractive interest rates.\u00a0<\/span><span data-ccp-props=\"{&quot;335559737&quot;:11}\">\u00a0<\/span><\/td>\n<td data-celllook=\"0\"><span data-contrast=\"auto\">It is not always guaranteed that you will qualify for lower interest rates, nor is it guaranteed that all existing debts will be consolidated.<\/span><span data-ccp-props=\"{}\">\u00a0<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p aria-level=\"1\">\n<p aria-level=\"1\"><strong>What is the difference between secured and unsecured debt consolidation loans?\u00a0<\/strong><\/p>\n<p><span data-contrast=\"auto\">The main difference between secured and unsecured debt consolidation is that the former requires collateral while the latter does not. It is generally your house which is secured against a consolidation loan. Failing to settle your debt on time will result in a loss of your house.\u00a0<\/span><span data-ccp-props=\"{&quot;335559685&quot;:1134,&quot;335559737&quot;:1230}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">Secured consolidation loans require you to consolidate a larger amount of debt, thereby hanging a tale.<\/span><span data-ccp-props=\"{&quot;335559685&quot;:1134,&quot;335559737&quot;:1230}\">\u00a0<\/span><\/p>\n<ul>\n<li aria-setsize=\"-1\" data-leveltext=\"\uf0a7\" data-font=\"Wingdings\" data-listid=\"3\" data-list-defn-props=\"{&quot;335552541&quot;:1,&quot;335559685&quot;:1854,&quot;335559991&quot;:360,&quot;469769226&quot;:&quot;Wingdings&quot;,&quot;469769242&quot;:[9642],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;\uf0a7&quot;,&quot;469777815&quot;:&quot;hybridMultilevel&quot;}\" data-aria-posinset=\"1\" data-aria-level=\"1\"><span data-contrast=\"auto\">Collateral is not enough to increase your potential to qualify for a larger amount.<\/span><span data-ccp-props=\"{&quot;335559737&quot;:1230}\">\u00a0<\/span><\/li>\n<\/ul>\n<ul>\n<li aria-setsize=\"-1\" data-leveltext=\"\uf0a7\" data-font=\"Wingdings\" data-listid=\"3\" data-list-defn-props=\"{&quot;335552541&quot;:1,&quot;335559685&quot;:1854,&quot;335559991&quot;:360,&quot;469769226&quot;:&quot;Wingdings&quot;,&quot;469769242&quot;:[9642],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;\uf0a7&quot;,&quot;469777815&quot;:&quot;hybridMultilevel&quot;}\" data-aria-posinset=\"2\" data-aria-level=\"1\"><span data-contrast=\"auto\">Lenders will run affordability checks, which include the evaluation of your credit report and income sources. Lenders will decide on the maximum limit based on your income and priority debts such as mortgages, car loans and other <a href=\"https:\/\/www.loanchester.co.uk\/short-term-installment-loans-uk.php\">instalment loans<\/a>.\u00a0<\/span><span data-ccp-props=\"{&quot;335559737&quot;:1230}\">\u00a0<\/span><\/li>\n<\/ul>\n<p aria-level=\"1\"><strong>Can I get debt consolidation with bad credit?\u00a0<\/strong><\/p>\n<p><span data-contrast=\"auto\">Yes, you can. A bad credit score does not preclude you from submitting your loan application for consolidation. Some lenders may require you to put down collateral, though.<\/span><span data-ccp-props=\"{&quot;335559685&quot;:1134,&quot;335559737&quot;:1230}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">Before applying for <\/span>debt consolidation <a href=\"https:\/\/www.loanchester.co.uk\/loans-for-bad-credit.php\">loans for bad credit<\/a><span data-contrast=\"auto\">, make certain that the lender you apply to accepts applications from subprime borrowers.\u00a0<\/span><span data-ccp-props=\"{&quot;335559685&quot;:1134,&quot;335559737&quot;:1230}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">It depends on their policy and your repayment capacity how much you will be able to consolidate. You can borrow between \u00a31,000 and \u00a350,000 to consolidate your debts. If your credit report is not stellar, you can borrow between \u00a31,000 and \u00a325,000.\u00a0<\/span><span data-ccp-props=\"{&quot;335559685&quot;:1134,&quot;335559737&quot;:1230}\">\u00a0<\/span><\/p>\n<p aria-level=\"1\"><strong>What is the cost of a debt consolidation loan?\u00a0<\/strong><\/p>\n<p><span data-contrast=\"auto\">The cost of a debt consolidation loan depends on three factors:<\/span><span data-ccp-props=\"{&quot;335559685&quot;:1134,&quot;335559737&quot;:1230}\">\u00a0<\/span><\/p>\n<ul>\n<li aria-setsize=\"-1\" data-leveltext=\"\uf0a7\" data-font=\"Wingdings\" data-listid=\"4\" data-list-defn-props=\"{&quot;335552541&quot;:1,&quot;335559685&quot;:1854,&quot;335559991&quot;:360,&quot;469769226&quot;:&quot;Wingdings&quot;,&quot;469769242&quot;:[9642],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;\uf0a7&quot;,&quot;469777815&quot;:&quot;hybridMultilevel&quot;}\" data-aria-posinset=\"1\" data-aria-level=\"1\"><b><span data-contrast=\"auto\">Interest rates<\/span><\/b><span data-contrast=\"auto\">: interest rates for consolidation loans start from 6.9%, and they could go up to 30%. Lenders decide interest rates based on your creditworthiness and repayment capacity. <\/span>Unsecured debt consolidation loans <span data-contrast=\"auto\">charge slightly higher interest rates than their secured counterparts.\u00a0<\/span><span data-ccp-props=\"{&quot;335559737&quot;:1230}\">\u00a0<\/span><\/li>\n<\/ul>\n<ul>\n<li aria-setsize=\"-1\" data-leveltext=\"\uf0a7\" data-font=\"Wingdings\" data-listid=\"4\" data-list-defn-props=\"{&quot;335552541&quot;:1,&quot;335559685&quot;:1854,&quot;335559991&quot;:360,&quot;469769226&quot;:&quot;Wingdings&quot;,&quot;469769242&quot;:[9642],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;\uf0a7&quot;,&quot;469777815&quot;:&quot;hybridMultilevel&quot;}\" data-aria-posinset=\"2\" data-aria-level=\"1\"><b><span data-contrast=\"auto\">Loan terms<\/span><\/b><span data-contrast=\"auto\">: longer repayment terms will reduce the size of monthly instalments, but you will end up paying more interest overall. Choose a repayment schedule which is neither too short nor too stretched.\u00a0<\/span><span data-ccp-props=\"{&quot;335559737&quot;:1230}\">\u00a0<\/span><\/li>\n<\/ul>\n<ul>\n<li aria-setsize=\"-1\" data-leveltext=\"\uf0a7\" data-font=\"Wingdings\" data-listid=\"4\" data-list-defn-props=\"{&quot;335552541&quot;:1,&quot;335559685&quot;:1854,&quot;335559991&quot;:360,&quot;469769226&quot;:&quot;Wingdings&quot;,&quot;469769242&quot;:[9642],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;\uf0a7&quot;,&quot;469777815&quot;:&quot;hybridMultilevel&quot;}\" data-aria-posinset=\"3\" data-aria-level=\"1\"><b><span data-contrast=\"auto\">Extra fees<\/span><\/b><span data-contrast=\"auto\">: you will have to pay consolidation fees, which can be up to 5% of the total borrowing amount.\u00a0<\/span><span data-ccp-props=\"{&quot;335559737&quot;:1230}\">\u00a0<\/span><\/li>\n<\/ul>\n<p><span data-contrast=\"auto\">Before accepting the offer, make sure that you will not struggle with repayments of consolidation loans.\u00a0<\/span><span data-ccp-props=\"{&quot;335559685&quot;:1134,&quot;335559737&quot;:1230}\">\u00a0<\/span><\/p>\n<p aria-level=\"1\"><span data-contrast=\"none\">What alternatives can you consider to consolidation loans?<\/span><span data-ccp-props=\"{&quot;134245418&quot;:true,&quot;134245529&quot;:true,&quot;335559685&quot;:414,&quot;335559731&quot;:720,&quot;335559738&quot;:360,&quot;335559739&quot;:80}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">Consolidation cannot always be a suitable option for everyone. For instance, if you cannot secure a lower interest rate, you should drop the idea of combining your existing debts. Instead, consider alternatives:<\/span><span data-ccp-props=\"{&quot;335559685&quot;:1134,&quot;335559737&quot;:1230}\">\u00a0<\/span><\/p>\n<ul>\n<li aria-setsize=\"-1\" data-leveltext=\"\uf0a7\" data-font=\"Wingdings\" data-listid=\"5\" data-list-defn-props=\"{&quot;335552541&quot;:1,&quot;335559685&quot;:1854,&quot;335559991&quot;:360,&quot;469769226&quot;:&quot;Wingdings&quot;,&quot;469769242&quot;:[9642],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;\uf0a7&quot;,&quot;469777815&quot;:&quot;hybridMultilevel&quot;}\" data-aria-posinset=\"1\" data-aria-level=\"1\"><b><span data-contrast=\"auto\">Balance transfer credit card<\/span><\/b><span data-ccp-props=\"{&quot;335559737&quot;:1230}\">\u00a0<\/span><\/li>\n<\/ul>\n<p><span data-contrast=\"auto\">This enables you to move balances from multiple credit cards to a new balance transfer credit card. These cards come with a 0% intro APR for a specific time period. If you settle the whole debt within the introductory period, you can avoid paying interest. The promotion period generally ends between 18 and 24 months.\u00a0<\/span><span data-ccp-props=\"{&quot;335559685&quot;:1134,&quot;335559737&quot;:1230}\">\u00a0<\/span><\/p>\n<ul>\n<li aria-setsize=\"-1\" data-leveltext=\"\uf0a7\" data-font=\"Wingdings\" data-listid=\"5\" data-list-defn-props=\"{&quot;335552541&quot;:1,&quot;335559685&quot;:1854,&quot;335559991&quot;:360,&quot;469769226&quot;:&quot;Wingdings&quot;,&quot;469769242&quot;:[9642],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;\uf0a7&quot;,&quot;469777815&quot;:&quot;hybridMultilevel&quot;}\" data-aria-posinset=\"2\" data-aria-level=\"1\"><b><span data-contrast=\"auto\">Debt snowball<\/span><\/b><span data-ccp-props=\"{&quot;335559737&quot;:1230}\">\u00a0<\/span><\/li>\n<\/ul>\n<p><span data-contrast=\"auto\">This method enables you to clear the smallest debt first while making the minimum payment to other debts. The snowball method is a suitable solution for those who need a motivational boost to keep going.\u00a0<\/span><span data-ccp-props=\"{&quot;335559685&quot;:1134,&quot;335559737&quot;:1230}\">\u00a0<\/span><\/p>\n<ul>\n<li aria-setsize=\"-1\" data-leveltext=\"\uf0a7\" data-font=\"Wingdings\" data-listid=\"5\" data-list-defn-props=\"{&quot;335552541&quot;:1,&quot;335559685&quot;:1854,&quot;335559991&quot;:360,&quot;469769226&quot;:&quot;Wingdings&quot;,&quot;469769242&quot;:[9642],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;\uf0a7&quot;,&quot;469777815&quot;:&quot;hybridMultilevel&quot;}\" data-aria-posinset=\"3\" data-aria-level=\"1\"><b><span data-contrast=\"auto\">Debt avalanche<\/span><\/b><span data-ccp-props=\"{&quot;335559737&quot;:1230}\">\u00a0<\/span><\/li>\n<\/ul>\n<p><span data-contrast=\"auto\">This method enables you to repay a debt with the highest interest rate first while making the minimum payment to others. This strategy is aimed at those who want to save money on crippling interest.\u00a0<\/span><span data-ccp-props=\"{&quot;335559685&quot;:1134,&quot;335559737&quot;:1230}\">\u00a0<\/span><\/p>\n<p aria-level=\"1\"><span data-contrast=\"none\">How Loanchester helps by offering consolidation loans<\/span><span data-ccp-props=\"{&quot;134245418&quot;:true,&quot;134245529&quot;:true,&quot;335559685&quot;:414,&quot;335559731&quot;:720,&quot;335559738&quot;:360,&quot;335559739&quot;:80}\">\u00a0<\/span><\/p>\n<p><b><i><span data-contrast=\"auto\">Case study<\/span><\/i><\/b><span data-ccp-props=\"{&quot;335559685&quot;:1134,&quot;335559737&quot;:1230}\">\u00a0<\/span><\/p>\n<p><b><i><span data-contrast=\"auto\">John Smith from Manchester<\/span><\/i><\/b><span data-ccp-props=\"{&quot;335559685&quot;:1134,&quot;335559737&quot;:1230}\">\u00a0<\/span><\/p>\n<p><b><i><span data-contrast=\"auto\">The problem<\/span><\/i><\/b><span data-contrast=\"auto\">: John contacted us a few months back. In his application, he mentioned that he needed to take out a \u00a37,000 personal loan. The purpose of using a loan was consolidation of other debts.\u00a0<\/span><span data-ccp-props=\"{&quot;335559685&quot;:1134,&quot;335559737&quot;:1230}\">\u00a0<\/span><\/p>\n<p><b><i><span data-contrast=\"auto\">The solution<\/span><\/i><\/b><span data-contrast=\"auto\">: We contacted John and asked him to submit payslips and bank statements of the previous six months, along with details of the debt he owed. We checked his credit report to track his payment behaviour. We found some irregularities in his payment behaviour.\u00a0<\/span><span data-ccp-props=\"{&quot;335559685&quot;:1134,&quot;335559737&quot;:1230}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">His credit report also revealed that he had recently taken out a car loan, although he had not missed any payments on that. Given that he had a long-term obligation, we were sceptical about his repayment potential.\u00a0<\/span><span data-ccp-props=\"{&quot;335559685&quot;:1134,&quot;335559737&quot;:1230}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">He attributed irregularities in payments to job loss. Other than that, his credit report did not reflect any issues. So, we decided to approve his application. It has been six months since the consolidation loan was approved, and he has made payments on time so far.\u00a0<\/span><span data-ccp-props=\"{&quot;335559685&quot;:1134,&quot;335559737&quot;:1230}\">\u00a0<\/span><\/p>\n<p><i><span data-contrast=\"auto\">Loanchester provides consolidation loans at lower interest rates than other mainstream lenders. We value our customers beyond their credit score.\u00a0<\/span><\/i><span data-ccp-props=\"{&quot;335559685&quot;:1134,&quot;335559737&quot;:1230}\">\u00a0<\/span><\/p>\n<p aria-level=\"1\"><strong>Final Thoughts\u00a0<\/strong><\/p>\n<p><span data-contrast=\"auto\">Consolidation can be the best solution when you are struggling with multiple debt payments, but ensure that you qualify for lower interest rates and that it costs you less than handling individual debts.\u00a0<\/span><span data-ccp-props=\"{&quot;335559685&quot;:1134,&quot;335559737&quot;:1230}\">\u00a0<\/span><\/p>\n<p><b><span data-contrast=\"auto\">FAQs<\/span><\/b><span data-ccp-props=\"{&quot;335559685&quot;:1134,&quot;335559737&quot;:1230}\">\u00a0<\/span><\/p>\n<ul>\n<li aria-setsize=\"-1\" data-leveltext=\"%1.\" data-font=\"Sitka Heading\" data-listid=\"7\" data-list-defn-props=\"{&quot;134224900&quot;:false,&quot;335552541&quot;:0,&quot;335559685&quot;:1494,&quot;335559991&quot;:360,&quot;469769242&quot;:[65533,0],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;%1.&quot;,&quot;469777815&quot;:&quot;hybridMultilevel&quot;}\" data-aria-posinset=\"1\" data-aria-level=\"1\"><b><span data-contrast=\"auto\">Is debt consolidation cheaper?<\/span><\/b><span data-ccp-props=\"{&quot;335559737&quot;:1230}\">\u00a0<\/span><\/li>\n<\/ul>\n<p><span data-contrast=\"auto\">Debt consolidation is generally cheaper than loans that are repaid within a short period of time in full. However, it is still advisable that you compare the total cost before jumping to any offer.\u00a0<\/span><span data-ccp-props=\"{&quot;335559685&quot;:1134,&quot;335559737&quot;:1230}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">Interest rates are influenced by your credit rating and repayment capacity. If your overall financial standing is not positive, high interest rates are charged. As a result, savings on interest might not be noticeable.\u00a0<\/span><span data-ccp-props=\"{&quot;335559685&quot;:1134,&quot;335559737&quot;:1230}\">\u00a0<\/span><\/p>\n<ul>\n<li aria-setsize=\"-1\" data-leveltext=\"%1.\" data-font=\"Sitka Heading\" data-listid=\"7\" data-list-defn-props=\"{&quot;134224900&quot;:false,&quot;335552541&quot;:0,&quot;335559685&quot;:1494,&quot;335559991&quot;:360,&quot;469769242&quot;:[65533,0],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;%1.&quot;,&quot;469777815&quot;:&quot;hybridMultilevel&quot;}\" data-aria-posinset=\"2\" data-aria-level=\"1\"><b><span data-contrast=\"auto\">Does a debt consolidation loan clear my debt?<\/span><\/b><span data-ccp-props=\"{&quot;335559737&quot;:1230}\">\u00a0<\/span><\/li>\n<\/ul>\n<p><span data-contrast=\"auto\">A consolidation loan itself does not reduce the debt, nor does it eliminate the debt. Consolidation shifts your debt by restructuring it into a new repayment term and interest rate. This can help clear your debts only if you make payments on time.\u00a0<\/span><span data-ccp-props=\"{&quot;335559685&quot;:1134,&quot;335559737&quot;:1230}\">\u00a0<\/span><\/p>\n<ul>\n<li aria-setsize=\"-1\" data-leveltext=\"%1.\" data-font=\"Sitka Heading\" data-listid=\"7\" data-list-defn-props=\"{&quot;134224900&quot;:false,&quot;335552541&quot;:0,&quot;335559685&quot;:1494,&quot;335559991&quot;:360,&quot;469769242&quot;:[65533,0],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;%1.&quot;,&quot;469777815&quot;:&quot;hybridMultilevel&quot;}\" data-aria-posinset=\"3\" data-aria-level=\"1\"><b><span data-contrast=\"auto\">Will debt consolidation improve my credit score?<\/span><\/b><span data-ccp-props=\"{&quot;335559737&quot;:1230}\">\u00a0<\/span><\/li>\n<\/ul>\n<p><span data-contrast=\"auto\">Yes, it can improve your credit score provided you discharge the whole debt on time.\u00a0<\/span><span data-ccp-props=\"{&quot;335559685&quot;:1134,&quot;335559737&quot;:1230}\">\u00a0<\/span><\/p>\n<ul>\n<li aria-setsize=\"-1\" data-leveltext=\"%1.\" data-font=\"Sitka Heading\" data-listid=\"7\" data-list-defn-props=\"{&quot;134224900&quot;:false,&quot;335552541&quot;:0,&quot;335559685&quot;:1494,&quot;335559991&quot;:360,&quot;469769242&quot;:[65533,0],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;%1.&quot;,&quot;469777815&quot;:&quot;hybridMultilevel&quot;}\" data-aria-posinset=\"4\" data-aria-level=\"1\"><b><span data-contrast=\"auto\">Is a secured debt consolidation loan risky?<\/span><\/b><span data-ccp-props=\"{&quot;335559737&quot;:1230}\">\u00a0<\/span><\/li>\n<\/ul>\n<p><span data-contrast=\"auto\">A secured debt consolidation loan is risky if you miss a payment. Because your house backs it, non-payment can result in losing your house.\u00a0<\/span><span data-ccp-props=\"{&quot;335559685&quot;:1134,&quot;335559737&quot;:1230}\">\u00a0<\/span><\/p>\n<ul>\n<li aria-setsize=\"-1\" data-leveltext=\"%1.\" data-font=\"Sitka Heading\" data-listid=\"7\" data-list-defn-props=\"{&quot;134224900&quot;:false,&quot;335552541&quot;:0,&quot;335559685&quot;:1494,&quot;335559991&quot;:360,&quot;469769242&quot;:[65533,0],&quot;469777803&quot;:&quot;left&quot;,&quot;469777804&quot;:&quot;%1.&quot;,&quot;469777815&quot;:&quot;hybridMultilevel&quot;}\" data-aria-posinset=\"5\" data-aria-level=\"1\"><b><span data-contrast=\"auto\">What should I check before applying?<\/span><\/b><span data-ccp-props=\"{&quot;335559737&quot;:1230}\">\u00a0<\/span><\/li>\n<\/ul>\n<p><span data-contrast=\"auto\">Before applying for a debt consolidation loan, you should check interest rates, consolidation fees, your budget and your credit score.\u00a0<\/span><span data-ccp-props=\"{&quot;335559685&quot;:1134,&quot;335559737&quot;:1230}\">\u00a0<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Managing multiple loans can be challenging. Missing payments not only hurts your credit score but also causes the debt to snowball. Reeling under the pressure of insurmountable debt, borrowers tend to consider several options. Consolidation is among them.\u00a0\u00a0 What Is a Debt Consolidation Loan?\u00a0 A debt consolidation loan is a personal loan that you take [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":69,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[8],"tags":[40,39],"class_list":["post-68","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-loan-guide","tag-consolidation-loans","tag-debt-consolidation-loan","entry"],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.loanchester.co.uk\/guide\/wp-json\/wp\/v2\/posts\/68","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.loanchester.co.uk\/guide\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.loanchester.co.uk\/guide\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.loanchester.co.uk\/guide\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.loanchester.co.uk\/guide\/wp-json\/wp\/v2\/comments?post=68"}],"version-history":[{"count":10,"href":"https:\/\/www.loanchester.co.uk\/guide\/wp-json\/wp\/v2\/posts\/68\/revisions"}],"predecessor-version":[{"id":371,"href":"https:\/\/www.loanchester.co.uk\/guide\/wp-json\/wp\/v2\/posts\/68\/revisions\/371"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.loanchester.co.uk\/guide\/wp-json\/wp\/v2\/media\/69"}],"wp:attachment":[{"href":"https:\/\/www.loanchester.co.uk\/guide\/wp-json\/wp\/v2\/media?parent=68"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.loanchester.co.uk\/guide\/wp-json\/wp\/v2\/categories?post=68"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.loanchester.co.uk\/guide\/wp-json\/wp\/v2\/tags?post=68"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}