Debt consolidation loans let you merge your debts by lending you a lump sum of money that pays off everything you owe to all your existing lenders. This means you’ll be left with just one monthly repayment to a single loan provider.

Debt consolidation loans can be used to pay off credit cards, store cards, overdrafts, buy-now-pay-later debt, and other personal loans.

The goal of a consolidation loan is to simplify your repayments, as well as hopefully reduce the amount of interest you pay each month. However, as many debt consolidation loans have long terms lasting many years, you may end up paying more interest overall.

How does it work? 

The first thing you’ll need to do is work out exactly how much you owe, by adding up any outstanding debts you have. This will show how much money you’ll need to borrow.

The debt consolidation loans in our comparison table go up to £50,000, meaning that you can combine different debts and loans adding up to that amount.

You’ll find that most unsecured debt consolidation loans usually offer terms of between one and seven years, or up to 20 or 30 years for most secured loans. However, some of the UK’s leading lenders will let you borrow for longer periods.

In general, longer loan terms are designed for borrowing a larger amount of money. Some lenders even cap the length of time you can borrow for if you’re only taking a smaller loan, for instance, less than £5,000. Different banks and building societies will set their own thresholds, so check the terms and conditions carefully before you apply.

Unsecured debt consolidation loans usually offer terms of between one and seven years.”

It’s only worth doing debt consolidation if you can find a loan that gives a lower interest rate than you’re already paying cumulatively on your debts.

Our loan repayment calculator can help you to see how changing the interest rates and term length can affect your monthly payments and make the loan cheaper in the long run. By trying out options, you can see if debt consolidation is suitable for you.

A debt consolidation loan may not be your only option. Even the cheapest consolidation loans might not be the best way to clear your debt, depending on your situation. It’s sensible to look into alternatives as well.

And remember, if your debts are getting on top of you, or you don't have the best credit rating, you can get free debt advice from a range of charities in the UK, including StepChange, National Debtline and Citizens Advice.

0% money transfer card

You can use 0% money transfer cards to move money into your bank account. Usually, you’ll have to pay a small transfer fee. And then you pay the lender back, interest free, over a set amount of time. Once the interest-free offer period ends, rates rise sharply, so you should make sure you have a plan to repay your debt before then.

0% balance transfer card

0% balance transfer cards are good for people with credit card debts. You move what you owe onto a single, new card, then you can pay that card back, interest free, over a set period. Most lenders charge a small fee, however, some are fee-free. Again, it’s important to pay the money back before the interest-free period ends, or you’ll start paying a much higher rate.

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