Free debt consolidation

Debt consolidation benefits and risks

Consolidating your debts can make your debts easier to manage, because you only have one payment to make each month. This can also making budgeting easier, as you're only dealing with one creditor.

However, even when a loan might be advertised as 'free debt consolidation' and you do not have to pay any fees to set it up, you still might end up worse off.

For example, the consolidation loan could carry higher interest rates or you might have to pay it back over a longer time period, making it more expensive to pay off.

If you have lots of debt, or if you've missed payments on your debts, this will have affected your ability to borrow more money. You might find that the only way you can borrow more money is at a higher interest rate. This means that you could end up paying more money back over the lifetime (or term) of the loan.

You may have to make a large payment to your debt consolidation loan each month, or you could find that you are paying the money back for a long period. If you're applying for any kind of loan you should always check how much the payments are each month, and how many payments you will need to make over the lifetime of the loan.

Consolidation advice

We advise you not to consolidate your debts without a first looking at your situation to see if it would help you. We also advise against consolidating your unsecured debts with a loan secured against your property as this would put your home at risk if you fall behind on payments.

We can help you decide if debt consolidation is the right solution for your situation. If you use our online Debt Remedy tool, we'll look at a range of debt solution to fit your specific circumstances and help you manage your debts.