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Debt Consolidation Loans

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About Debt Consolidation Loans

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Watch this video to help you understand debt consolidation loans more

A debt consolidation loan means taking out a new loan to pay off existing debts. By doing so, you can make managing your finances simpler and reduce your monthly outgoings. When you’ve got several debt repayments going to multiple lenders every month it can be difficult to budget. A debt consolidation loan could make things simpler by rolling your debts into one lower manageable monthly payment.


Lower monthly payments

Debt consolidation loans can help reduce your monthly payments by either getting you a lower interest rate than your current unsecured credit, by allowing you to repay your loans over a longer period or often both.

Bear in mind that paying your debt off over a longer period means you will pay interest for longer so could pay more interest in the long term. However lower interest rates may help to counteract this and you can pay the loan off sooner once your monthly payments are more manageable. Also think carefully before securing other debts against your home. We will explain and calculate the details for you.


Is taking out a new loan a good idea if I’m already in debt?

Typically debt consolidation loans result in a lower contractual monthly payment but a higher total repayable. The debt consolidation loan is likely to be with you for a longer period of time than if the debt was not consolidated. It’s important to get advice on this sort of loan. Only when you are armed with the necessary facts and figures can a decision be made on whether it makes good sense. It is the most common type of loan we do with customers generally valuing lower monthly payments over the total repayable.

If you are already in debt, and as a result your credit profile has begun to suffer e.g. you have CCJ’s / default’s then you should discuss with an adviser sooner rather than later as they may be able to help with a bad credit secured loan, before your credit profile gets worse.


Should I look at debt management or an Individual Voluntary Agreement instead of a debt consolidation loan?

You could but take care, especially if you have a reasonable credit profile. Consider all the options open to you before doing anything. A step in the wrong direction could do irreparable damage.


Is it easy to get a debt consolidation loan?

You could but take care, especially if you have a reasonable credit profile. Consider all the options open to you before doing anything. A step in the wrong direction could do irreparable damage.

For more information on secured loans click here.

    Find a secured loan

    Enter some details and we will estimate your repayments on our popular loan plans – this will NOT affect your credit rating.

    How much you would like to borrow?

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    For how long?

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    What best describes your credit rating?

    Perfect: In the last year you have no mortgage arrears, CCJs or defaults. Your credit score is high.

    Your repayments are estimated at

    £249.51 per month


    More than 50% of borrowers receive offers better than our representative examples. The %APR rate you will be offered is dependent on your personal circumstances.
    Secured / Second Charge Loans secured on land
    Borrow £62,000 over 180 months at 9.9% APRC representative at a fixed rate of 7.85% for 60 months at £622.09 per month and thereafter 120 instalments of £667.54 at 9.49% or the lender’s current variable rate at the time. The total charge for credit is £55.730.20 which includes £2,660 advice / processing fees and £125 application fee. Total repayable £117,730.2
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    Related Articles

    Promise Money is a broker not a lender. Therefore we offer lenders representing the whole of market for mortgages, secured loans, bridging finance, commercial mortgages and development finance. These loans are secured on property and subject to the borrowers status.

    More than 50% of borrowers receive offers better than our representative examples

    The %APR rate you will be offered is dependent on your personal circumstances.

    Mortgages and Remortgages

    Representative example

    Borrow £270,000 over 300 months at 7.1% APRC representative at a fixed rate of 4.79% for 60 months at £1,539.39 per month and thereafter 240 instalments of £2050.55 at 8.49% or the lender’s current variable rate at the time. The total charge for credit is £317,807.66 which includes £2,500 advice / processing fees and £125 application fee. Total repayable £587,807.66

    Secured / Second Charge Loans

    Representative example

    Borrow £62,000 over 180 months at 9.9% APRC representative at a fixed rate of 7.85% for 60 months at £622.09 per month and thereafter 120 instalments of £667.54 at 9.49% or the lender’s current variable rate at the time. The total charge for credit is £55,730.20 which includes £2,660 advice / processing fees and £125 application fee. Total repayable £117,730.20

    Unsecured Loans

    Representative example

    Annual Interest Rate (fixed) is 49.7% p.a. with a Representative 49.7% APR, based on borrowing £5,000 and repaying this over 36 monthly repayments. Monthly repayment is £243.57 with a total amount repayable of £8,768.52 which includes the total interest repayable of £3,768.52.


    THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME

    REPAYING YOUR DEBTS OVER A LONGER PERIOD CAN REDUCE YOUR PAYMENTS BUT COULD INCREASE THE TOTAL INTEREST YOU PAY. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT.


    Promise Money is a trading style of Promise Solutions Ltd – Company number 04822774
    Promise Solutions, Fullard House, Neachells Lane, Wolverhampton, WV11 3QG

    Authorised and regulated by the Financial Conduct Authority – Number 681423
    The Financial Conduct Authority does not regulate some forms of commercial / buy-to-let mortgages

    Website www.promisemoney.co.uk