Debt Consolidation Loans

What are debt consolidation loans?

A debt consolidation loan is a type of borrowing typically used to bring your finances under control. If you’re making multiple payments for credit cards, loans or other borrowing every month, consolidating these debts with the right loan can mean you only pay one lender each month, rather than making multiple repayments.

They work by giving you the money to pay off all your existing loans, credit cards or other debt amounts and replace them with a single, fixed rate monthly repayment.

This can help with your budgeting, in that you won’t need to keep juggling your bills and borrowing from one lender to pay back another.

Find out more about debt consolidation.

Is a consolidation loan right for me?

Whether a consolidation loan is right for you depends on your individual circumstances. Taking out a loan to pay off other debts can make managing your finances easier. If you have CCJs or poor credit, our loan experts can help you by searching the market to see which loans offer the best chance of eligibility. Our guide can help you find out more about being eligible for a loan.

Please note you must be a UK resident and 18 years of age to be eligible for a loan.

Benefits of choosing to consolidate your loans

Consolidating your loans helps 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.

A bad credit debt consolidation loan can also help your credit score. Demonstrating you’re able to manage debts by keeping up with repayments could improve your credit rating, giving you access to a wider range of loan options in the future.

Disadvantages of consolidating debt with a loan

Many people may find debt consolidation is a great way to take back control of their finances. However, it may not be the best option for everyone. In some cases, consolidating your loans will not reduce your repayments, as it depends on how much you are currently repaying and over what period. This type of loan cannot erase your debts entirely, so it’s best to see it as a new payment plan rather than 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. It’s important to consider what you can afford to repay and whether paying over a longer period will make your monthly repayments more manageable.

Before you apply, you may also 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 property such as your home could mean losing it if you default on loan repayments.

Before you apply…

There are ways you can prepare before you apply to give yourself the best chance of being approved. This can include:

Assess the cost of repayments

Calculate how much you’re currently paying monthly, and ensure it tallies with the new repayment structure of your consolidated loan amount. This can help you decide whether combining your credit into a single repayment is a better option.

Check details on your income and outgoings

It may help lenders if you give them the details on your income and monthly outgoings. When applying for a debt consolidation loan, it’s especially helpful to share information about your other debts, so they can be sure you can comfortably make repayments on a new loan agreement.

Look up your credit history

Familiarise yourself with your credit report so you can give lenders all the information they need, if there are any queries. Lenders tend to run a credit check as part of your loan application, so they can see your borrowing history as well as any county court judgements (CCJs) or any other debts.

Representative example

SECURED LOANS - Rates start at 2.99% variable. We also have a range of plans with rates up to 65.2%, giving us the flexibility to help you find a loan that suits your needs. Representative example: if you borrow £10,000 over 10 years at an Annual Interest Rate of 5.14% (variable), you will make 120 payments of £122.71 per month.

The total amount repayable will be £14,725.20. This includes a lender fee of £495 and a broker fee of £1,000, both of which have been added to the loan. The overall cost for comparison is 8.6% APRC representative.

The maximum APR is 65.2%.

What do I need to apply?

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:

• Personal financial details
• Employment status
• Details of your income

We may also discuss your current situation and the existing debts you have, as this helps us search the market for the best loan for you.

Before you get started, it’s best to make sure you have details on any outstanding amounts to hand, along with your current loan terms, monthly payments and interest rates. This will help us understand your situation and whether we can help reduce the burden by offering a loan that would lower your monthly repayment amount. Our loan calculator can help you determine what kind of monthly repayments you can expect to make.

FAQs about consolidation loans

Can I pay off a debt consolidation loan early?

As with most loans, it is sometimes possible to repay the amount in full ahead of time. It’s important to remember, however, that doing so may incur an Early Repayment Fee. This amount usually varies from lender to lender. Always check the terms of your loan before you apply.

Can I take a break from paying back my debt consolidation loan?

If you think you might need a break from repayments at any point, you should check the terms before applying. While some lenders do offer ‘payment holidays’ on consolidation loans, these can show up as a negative on your credit report, so it’s important to get advice before you ask.

Do debt consolidation loans hurt your credit score?

Consolidating your loans into one monthly payment might initially negatively affect your credit score, but over time it could help boost your credit score if you try not to miss repayments and keep on top of making payments regularly. If you're concerned about any negative implications, however, it's important to first seek advice from one of our experts.

Can I get a debt consolidation loan with bad credit?

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.

Debt consolidation loans from Norton Finance

Norton Finance has the expertise to help you find the right loan, even if you’re unemployed, retired or have CCJs. We’re experienced with in-depth loan comparisons, 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 the next day.

Loan details

We can give you the tools you need to better manage your financial situation, by offering a simple and flexible loan process. Our team can 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. They usually 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 2.99%.

• Are there any loan fees?
  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.