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Debt consolidation loans

Free debt consolidation loans

A debt consolidation loan is a loan you can take out and use the money to pay your creditors back. This means instead of having lots of separate payments to make, you only need to pay a single loan back each month.

A “free” debt consolidation loan does not have fees to set it up. But it will still have interest added to the amount you borrow.

We always recommend getting free debt advice to look at all the options available to deal with your debt before taking out a consolidation loan.

Quickly find what you are looking for


  1. Is it a good idea to get a debt consolidation loan?
  2. Is debt consolidation free?
  3. How expensive are debt consolidation loans?
  4. I can’t pay back my debt
  5. Does consolidation ruin your credit score?
  6. Secured and unsecured debt consolidation
  7. Is there a government scheme to pay off debt?
  8. Is debt consolidation right for me?

Is it a good idea to get a debt consolidation loan?

A consolidation loan is tempting because you only pay one repayment each month, instead of paying many companies in different places. This can make budgeting easier if you only have one debt.

But, even free consolidation loans are risky because:


  • They can carry higher interest rates
  • They may take longer to pay back
  • Repayment amounts may not be flexible if you suddenly cannot afford them
  • This makes it more expensive in the long run

There are other ways to feel more in control of your debt than taking out a loan. Use our debt consolidation calculator to find out if debt consolidation or debt advice is right for you.

Is debt consolidation free?

It sometimes does not cost you anything upfront to take out a new loan, but there will be interest to pay on the amount you borrow.

When you consolidate credit card debt by moving the balances to other cards, you may be offered a 0% balance transfer fee. This might help keep costs low for a short time, but over time the offer will run out and interest will start to be applied.

A balance transfer fee is a cost you will pay to move debt from one credit card to another. Many credit card companies offer 0% transfer fees as a way to inspire you to apply. 0% means you will pay nothing to move the debt across.

The 0% offer might only last for 12 months. If you move more debt onto the card after the offer has finished, the transfer fee could even be as high as 18%.

Say you move £2,000 onto the card and the interest rate is 18%. That is £2,360 you now owe.

How expensive are debt consolidation loans?

This depends on the interest rate a lender offers you.

The rate you are offered can be affected by how much debt you have, and if you miss any repayments.

If you have poor credit, you may only be able to borrow at a higher interest rate. This means you pay more back in total to clear the loan. And you may not be able to afford that.

Find out more about interest and charges.

I can’t pay my debt so what options do I have?

We recommend you get free debt advice to look at all the options available to deal with your debt.

We will help you make a budget and find a debt solution that works for your situation.

Our free debt advice and support service is available online 24/7. You can start, pause, and pick it back up again whenever you like.

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Does debt consolidation ruin your credit score?

Your credit score will dip when you first take out a new loan. But if you keep up with payments and pay in full, it can help boost your score and your credit history.

Your credit score can be affected if you:


  • Make late payments
  • Miss payments
  • Are close to your credit limit or go over it
  • Are financially linked to someone with poor credit, like a joint account

If your credit score is already low, read more about consolidation with poor credit.

Secured and unsecured debt consolidation

Secured loans mean your home is linked to the loan. If you fall behind or cannot repay the loan, the lender can repossess your home.

Unsecured loans are not linked to your home.

Before you get a consolidation loan, you should always:


  • Look at your situation
  • Look at all the options available to you

Learn more about secured and unsecured debt consolidation.

Is there a government scheme to pay off debt?

There is no government backed debt consolidation scheme. Adverts that mention this are often trying to mislead you.

But there are government approved debt solutions, like:


  • Debt relief orders (DRO)
  • Individual voluntary arrangements (IVA)
  • Bankruptcy

In Scotland, there is an official government-backed solution called the debt arrangement scheme (DAS). It helps people repay debts at a rate they can afford.

Debt consolidation can sometimes be confused for debt management. Read our guide to debt consolidation or debt management to find out the differences.

Is debt consolidation right for me?

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Should I consolidate debt?

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"So simple to do online"

“So easy and quick to get help and get everything sorted out. All done online, didn’t need to speak to anyone to get the payment plan set up. I wish I’d done it sooner.”

Sharon, Feefo Review