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Things to consider before getting a consolidation loan

• Taking out a loan means taking out more credit. This could affect your credit score
• You need to be really sure you will be able to keep up with the repayments. Missed or late payments can create more problems
• The added interest may not be cheaper than you are paying now
• Will you be able to avoid using credit elsewhere while you pay off the loan?
• It depends on your personal circumstances if a loan is the right way to deal with debt. Get debt advice before making a decision

How much debt is too much to consolidate?

You can get consolidation loans for large amounts. But it does mean the amount of interest you take on gets bigger too.

The amount you owe could mean you fit the criteria for a different debt solution, like formal debt management or a solution that writes off some of your debt.

No amount of debt is too big to deal with. There is always a way to sort it. The important thing is going ahead with a solution that makes your situation better, not harder.

Common questions about debt consolidation loans

How do debt consolidation loans work?

You work out how much you need to borrow to pay off all your debt. You then apply for a debt consolidation loan for that amount. If your application is approved, you can use the money to pay back each of your creditors.

Then you only have one monthly repayment to make to the loan lender. This can make budgeting easier to manage.

But there are things to consider before you take our more credit. Read more about the pros and cons of debt consolidation.

Is a debt consolidation loan a good idea?

It can be a useful way for some people to deal with debt. But for others it can be a slippery slope into more debt.

It depends on what your personal circumstances are if a consolidation loan will improve your situation or make it worse. And there may be other options better suited to you. The best thing to do is get free and impartial advice to look at all your options.

What are the alternatives to a consolidation loan?

A debt management plan (DMP) is similar to consolidation but has different processes and benefits. You pay your debt off at a rate you can afford by making a single monthly payment.

There are ways to get some of your debt written off too. But these options have strict rules to meet, and they are not ideal for everyone.

• Debt relief order (DRO)
• Individual voluntary arrangement (IVA)
• Debt arrangement scheme (Scotland only)

Can I get a debt consolidation loan with bad credit?

Having a low credit score or a less-than-ideal credit history can mean it is harder to get approved for consolidation loans. But it is not impossible. It also might mean you are offered higher interest rates than you pay now, or higher risk secured loans.

Find out more about debt consolidation with bad credit.

Can I consolidate credit card debt?

Lots of people consolidate credit card debt by moving the balances onto a low interest credit card. But these loans can often take longer to pay off and can actually add to your debt. Especially if you only pay the minimum repayment amounts each month.

Use the debt consolidation calculator to find out if this is a good choice for you.

Still not sure about debt consolidation?

It is a good idea to get free debt advice and look at all the options you might have.

We will help you make a realistic budget and explain all the ways you can deal with your debt. And we can help you choose which one is best for your situation.

Get free advice