Debt Consolidation Loans

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Consolidate multiple debts into convenient monthly repayments with Believe Money. Don’t let your history hold you back – our brokers specialise in finding debt consolidation loans for bad credit.

Debt consolidation loan interest rates ranging from 6.3% to 49% APR
Our brokers have access to a vast network of specialist lenders
5-star customer service from start to finish
No impact on your credit score
No upfront fees or hidden charges

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What is debt consolidation?

Debt consolidation is the process of combining multiple debts into a single payment. The financial strategy simplifies repayments and can save money by offering lower interest rates.

For example, if you have outstanding debt on several credit cards, combining them into one single debt makes it easier to manage your finances and often reduces the total amount of interest you’ll repay.

What are debt consolidation loans?

A debt consolidation loan gives you a lump sum that you’ll use to pay off multiple debts. You’ll then make repayments based on the loan’s terms and interest rates.

Just like a normal secured loan, you’ll agree on an affordable monthly payment plan with the lender so that you can manage your debt in a timely and achievable manner.

For example, if you have credit card debt, outstanding personal loans, or store cards with varying interest rates, a debt consolidation loan will let you pay them off immediately and make a single monthly repayment.

There are two types of debt consolidation loans:

Secured Debt Consolidation Loans: Many debt consolidation loans are secured loans, which are secured against something of value you own, like a property or vehicle. These loans are best if you have a bad credit score, as your assets give the lender security.
Unsecured Debt Consolidation Loans: Unsecured debt consolidation loans don’t require any assets, but your eligibility depends on your credit score. Low credit scores might mean you receive a smaller loan and higher interest rates.

How Does Debt Consolidation Work?

Debt consolidation is a relatively straightforward process:

Identify Your Debts: Assess all outstanding debts, including interest rates, balances and monthly payments. Then, decide which you’d like to consolidate.
Choose a Consolidation Method: Your options include secured loans, unsecured loans, and balance transfer credit cards. Contact an experienced finance broker to find the best debt consolidation loan for your needs.
Application: Once you’re matched with a suitable loan, the broker will help you file your application.
Pay Off Your Debts: Use the loan to pay off your existing debts.
Monthly Payments: Continue to make the agreed-upon monthly payments until your consolidation loan is paid off.

What type of debt can be consolidated?

There are numerous debts that you can include in a consolidation loan, including:

Credit Card Debt: Credit card debt can build up quickly as the interest rates accumulate.
Store Cards: Store cards often have higher interest rates than credit cards, resulting in significant debt.
Unsecured Personal Loans: Most personal loans have higher interest rates and shorter repayment terms than secured loans, so it’s easy to get into debt.
Bank Overdrafts: Some people use the loan to get out of their overdraft, ensuring they can pay back their consolidation loan and avoid extra interest fees.
Outstanding Bills: You might not know this, but you can consolidate some utility bills, too. These include your gas, electric, TV and mobile phone debt, private medical treatments and personal lines of credit.

Pros and Cons of Debt Consolidation Loans

Pros:

Simplified repayment: With a single monthly payment, it becomes easier to track and manage your debt obligations.
Lower interest rates: Debt consolidation can potentially result in a lower interest rate compared to the rates on individual debts, especially if the new loan has more favourable terms.
Reduced monthly payments: Debt consolidation can lower the monthly payment amount by extending the repayment period, providing more budget breathing room.
Improved credit score: Successfully managing consolidated debt can positively impact credit scores, especially if it helps you make timely payments and reduce your overall debt burden.

Cons:

Length: Entering into a debt consolidation agreement could mean you spend longer paying off the loan.
Fees and Charges: You’ll also need to factor in other fees, such as balance transfers, early repayments, and arrangement charges.
There’s Still Risk: Defaulting on a secured loan puts your home or other valuable assets at risk. Unsecured lenders can still recover their debts through court action.
Temptation: When you clear your credit cards, it’s tempting to begin spending on them again – resulting in more debt.

Alternatives to Debt Consolidation Loan

A debt consolidation agreement is one of the most popular borrowing solutions, but some prefer to explore other options. There are some available, but each comes with its disadvantages.

Balance transfer credit cards

Balance transfer credit cards let you transfer your existing balance from one or multiple cards. Most come with a 0% introductory interest rate, which lasts from a few months to over a year.

Interest rates can rise quickly, and if you keep spending money on your credit cards, you’ll get into more debt.

Home equity line of credit

A home equity line of credit (HELOC) is a loan that uses the equity in your home as collateral. Your eligibility for a HELOC depends on your available equity, so they’re not available for people with large mortgages and outstanding debt.

Most HELOCs have variable interest rates, making them unpredictable.

Can you get a debt consolidation loan for bad credit?

Bad credit doesn’t necessarily stop you from getting a debt consolidation loan; our professional brokers can help. With access to a vast network of specialist lenders, we’ll work with you to find an agreement that aligns with your needs. Better still, you won’t have to worry about upfront fees.

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Why Use Believe Money?

Believe Money is an award-winning finance broker dedicated to offering the best range of affordable loan options. Whatever your circumstances or credit rating, we’re committed to getting you the best secured loan interest rates by searching our entire panel of secured loan providers.

Whatever you need a secured loan for, we’re here to help. Our specialist advisors are available Monday to Friday, so if you need any help please contact us online or give us a call on 01302 591 360.

FAQs

Do debt consolidation loans hurt my credit score?

As with any borrowing solution, a debt consolidation loan can impact your credit file if you don’t repay on time or continue accumulating debt. When managed correctly, they can improve your credit score, opening up future opportunities.

Is it easy to get a debt consolidation loan with bad credit?

While some lenders have stricter terms than others, some specialist lenders will offer a loan. However, it’s important to remember that the interest rates might be higher, and you’ll probably have stricter repayment terms.

How does a debt consolidation loan help with bad credit?

Consolidation loans turn all your outstanding debts into one simple payment. As long as you stick to the repayment schedule, you can avoid any further adverse effects on your credit report and recover financially.

What are the requirements for a debt consolidation loan with bad credit?

The specific requirements can vary among lenders, but you’ll need to provide proof of income, employment verification, and information about your debts. Lenders may also consider your credit score, debt-to-income ratio, and financial situation.

Are there any risks associated with debt consolidation loans?

Some risks to consider include getting into further debt and losing your home. It’s always a good idea to address the root causes of your debt and ensure that you can manage the monthly repayments before agreeing to the loan.

Where can I find debt consolidation loans for bad credit?

Believe Loans has a vast network of specialist lenders who work with applicants from all backgrounds. We connect our clients with specialist lenders who judge their individual circumstances instead of the typical tick-box criteria.

How can I improve my chances of getting approved for a debt consolidation loan with bad credit?

To increase your chances of approval, consider finding a co-signer with good credit, providing collateral for a secured loan, or working on improving your credit score before applying.

Specialist lenders might be available, so don’t hesitate to contact us to discuss your current situation.

How can I avoid falling into debt again after consolidating?

Think about what caused your debt in the first place and create a strict budget. It’s also good to seek professional financial advice to help you manage your finances effectively.