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A debt consolidation loan allows you to make one repayment a month, often at a lower interest rate than your current borrowing
Makes life simpler by having to deal with just one lender
Debt consolidation loans can also offer help for people with a poor credit rating
Can help reduce your monthly outgoings. However, if you are extending the term of your borrowing, this may increase the total amount repayable
Consolidation loans can be unsecured or secured against property
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A debt consolidation loan is typically used to pay off all your existing loans, credit cards or other debt amounts and replace them with a single monthly repayment. With fewer loans to repay, you could take back control of your finances and only deal with one lender. This will help with your budgeting, potentially making your financial life easier, in that you won’t need to keep juggling your bills and robbing Peter to pay Paul.
Whether a consolidation loan is right for you depends on your unique circumstances. Taking out a loan to pay off other debts can make managing your finances easier. If you have CCJs or poor credit, you may find it harder to be accepted for a loan on grounds of eligibility. Our guide can help you find out more about being eligible for a loan.
Consolidating your loans helps to avoid juggling several individual repayments and can sometimes mean you pay less than short-term loans. It's also usually easier to monitor than credit card debts, which have changing interest-free periods.
Opting for a secured consolidation loan also means you may be viewed as a lower risk to lenders. For this reason, you could be offered a lower rate.
A bad credit debt consolidation loan can feasibly help your credit score. Demonstrating you’re able to manage debts by keeping up with repayments could improve your credit rating, giving you wider access to loan options in the future.
In some cases, consolidating your loans will not reduce your repayments entirely, as it depends on how much you are currently repaying and over what period. This type of loan cannot erase your debts entirely and should not be taken out as a form of debt relief or settlement.
Taking out a debt consolidation loan with a longer loan repayment period could also mean you end up paying more overall than your previous individual repayments.
Before applying, it’s important to consider what you can afford to repay, as well as whether you need to stop any further borrowing on your other loans and credit cards to ensure you don’t fall further into debt after taking out the consolidation loan.
Securing your loan against an asset such as your home could mean losing it if you default on loan repayments.
There are ways you can prepare before you apply to give yourself the best chance of being approved. This can include:
Calculate how much you’re already repaying for current loans and ensure it tallies with the new repayment structure of your consolidated loan amount. This will help you decide whether combining your credit into a single repayment is a better option.
It helps lenders to give them the details on your income and monthly outgoings. When applying for a debt consolidation loan, it’s especially helpful for them to know about your other debts, so they can be sure you can comfortably make repayments on a new loan agreement.
Familiarise yourself with your credit report so you can give lenders all the information they need, if there are any queries. Lenders tend to check your credit rating as part of your loan application, so they can see your borrowing history as well as any county court judgements (CCJs) or any other bad debt.
HOMEOWNER UNSECURED LOANS - Rates from 7.3% APR.
Representative example - if you borrow £12,000 over four years at a Representative APR of 15.4% APR (fixed), you would make repayments of £330.33 per month. Maximum APR 99.1%.
When you start an application online, our team will be in touch over the phone to talk through a few details. We’ll ask for further information about you such as:
We’ll also discuss your current situation and the existing debts you have. This helps us search for the best loan for you.
Before you get started, make sure you have those outstanding amounts, repayment period, monthly payments and current interest rates to hand. This will help us understand exactly what you’re paying out and whether consolidating debts would lower your monthly repayment amount.
As with most loans, it’s possible to repay the amount in full at any time when you take out a loan. It’s important to remember, however, that doing so may incur an Early Repayment Fee. This amount is calculated according to how much interest won’t be paid through your early repayment. Always check the terms of your loan before you apply.
If you think you might need a break from repayments, it’s vital to check the terms before signing up. While some lenders do offer ‘payment holidays’ on consolidation loans, these can have a negative effect on your credit report, so make sure to assess the situation beforehand.
Consolidating your loans into one monthly payment might initially affect your credit score, but this can be recovered. Ensure you never miss a repayment and keep on top of making payments regularly. If you're concerned about any negative implications, however, it's important to first seek the advice of an expert.
Some lenders offer debt consolidation loans for poor credit, where customers who may have been rejected elsewhere can still work to take control of their situation. In some instances, you might not be able to borrow as much, and you may be offered higher interest rates than those without bad credit, but we will always try to find a loan that meets your needs and circumstances.
Norton Finance has the expertise to help you find the right loan, even if you’re unemployed, retired or have CCJs. We’re a broker, not a bank, so we can search the whole market for the best deal to suit your needs.
We have access to over 600 lending plan products, helping us to find a solution for you. The loans we find could allow you to borrow from £3,000 to £500,000 to consolidate existing loans, over a period of one to 30 years.
Once you’ve submitted your application, we’ll be able to give you an ‘in principle’ decision within 24 hours.
We can give you the tools you need to better manage your financial situation and provide a simple and flexible loan process. Our team will assist you in every way possible to ensure you get the repayment terms and interest rates that are best for you.
How much can I borrow?
You can borrow anything from £3,000 to £500,000 when you choose Norton Finance and our trusted network of lenders.
How long are the repayment terms?
Repayment terms vary from between one to 30 years. These depend on your personal circumstances, including how much you borrow and the amount you can comfortably afford to pay back each month.
What are the interest rates?
The interest rate you’re offered will depend on your individual money management history and current credit score. If you’re a homeowner, our secured loan rates start at 3.37%.
Are there any loan fees?
Norton Finance doesn’t lend directly to its customers because we’re a broker, not a bank. We don’t charge any up front fees. However, we may charge a broker fee of up to 12.5% on all secured consolidation loans, capped at £3,995. We don’t charge fees on unsecured consolidation loans as we receive a commission from the lender.
You can use a consolidation loan to help pay off all sorts of existing debts, although it’s important to note that mortgages are not included.
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