Compare Debt Consolidation

How do I compare debt consolidation loans?

Finding the right debt consolidation loan means looking beyond the headline interest rate. Follow these steps to make sure you get a deal that genuinely saves you money and fits your budget.

1. Step 1: Add up your existing debts. List every debt you want to consolidate, including the outstanding balance, interest rate, and monthly payment for each one. This gives you a clear total to work with and a benchmark to compare against. Do not forget smaller debts like store cards and overdrafts, as the interest on these is often the highest.
2. Step 2: Check your credit report. Review your credit file with all three UK agencies (Experian, Equifax, and TransUnion) before you apply. Correcting errors such as wrong addresses or accounts that should be marked as settled can improve your score and unlock better rates. Registering on the electoral roll is another quick way to boost your profile.
3. Step 3: Compare the total cost, not just monthly payments. A lower monthly payment spread over a longer term can cost you significantly more in total interest. Use our debt consolidation calculator to see the full picture before you commit. Always compare the total amount repayable across different loan terms and rates.
4. Step 4: Get a personalised quote. Use the Money Saving Advisors gateway to receive tailored quotes from lenders who match your profile. Soft-search tools let you check eligibility without affecting your credit score. This way you can compare offers side by side without any risk.
5. Step 5: Speak to an advisor if you are unsure. If your situation is complex, for example if you have bad credit, are self-employed, or owe more than 25,000 pounds, an advisor can search specialist lenders and negotiate terms on your behalf. They will also flag any early repayment charges on your existing debts that could affect your savings.

What kind of debt consolidation do I need?

The right type of debt consolidation depends on how much you owe, your credit history, and whether you own property. Here are the most common situations and the options that typically work best for each.

You have manageable credit card debt

If you owe less than 20,000 pounds across credit cards and store cards, an unsecured personal loan at a competitive rate is usually your simplest option. You will get a fixed monthly payment and a clear end date for your debt. This works best when your credit score is fair to good, as you will qualify for rates that are lower than what your cards are charging you.

You have a poor credit history

Borrowers with defaults, CCJs, or a low credit score can still consolidate their debts. Specialist bad-credit lenders consider your full circumstances, not just your credit file, though interest rates will be higher than standard products. A broker can help you find the right lender without multiple hard searches damaging your score further.

You owe a large amount and own property

If your total debt exceeds 25,000 pounds and you have equity in your home, a secured loan or debt consolidation mortgage could offer a lower rate and higher borrowing limit. Remember that your home is at risk if you do not keep up repayments, so make sure you can comfortably afford the monthly payments before proceeding.

You want to keep your current mortgage deal

If you are on a competitive mortgage rate and do not want to remortgage, a second charge mortgage lets you borrow against your property without disturbing your first mortgage. This is particularly useful if your existing mortgage has high early repayment charges that would make remortgaging expensive.

You want to understand all your options first

If you are not sure whether consolidation is right for you, start with our guide to alternatives to debt consolidation or read our is it worth it guide to weigh up the pros and cons in detail. There is no point consolidating if your current situation is already manageable or if there is a better solution available.

What types of debt consolidation are available?

There are several ways to consolidate your debts in the UK. The table below compares the main options so you can see which might suit your circumstances.

What fees and costs might I have to pay?

Debt consolidation is not always free of charge. Understanding the potential fees upfront helps you calculate whether consolidation will genuinely save you money after all costs are accounted for.

How much can I borrow for debt consolidation?

The amount you can borrow depends on several factors. Lenders assess your full financial picture before making an offer, so understanding what influences their decision helps you set realistic expectations.

• Your income and employment status. Lenders typically require your total debt repayments, including the new loan, to be no more than 40% to 50% of your gross monthly income. Stable employment or a consistent self-employed income strengthens your application and may unlock higher amounts.
• Your credit score. A higher credit score unlocks larger borrowing amounts and better rates. If your score is below 600, you may be limited to smaller unsecured loans of up to 7,500 pounds, or you may need to consider a secured option with more favourable limits.
• The type of loan you choose. Unsecured personal loans typically range from 1,000 to 50,000 pounds, with most lenders offering their best rates on loans between 7,500 and 25,000 pounds. Secured loans can offer up to 500,000 pounds or more if you have sufficient equity in your property.
• Your existing debt total. Lenders want to see that consolidation will genuinely improve your financial situation. If your debts are very high relative to your income, they may offer a lower amount than you requested or suggest alternative debt solutions such as a debt management plan.
• Available equity (secured loans only). For a secured loan or remortgage, lenders typically allow you to borrow up to 85% to 90% of your property's current market value, minus your existing mortgage balance. A professional valuation determines how much equity is available.

How can I find a better debt consolidation deal?

Small steps before you apply can make a significant difference to the rate you are offered and the total cost of your loan. These tips will help you get the best possible outcome.

1. Check your credit report for errors first. Mistakes on your credit file, such as incorrect addresses or debts that have already been paid, can drag your score down. Correcting these before you apply could move you into a better rate band and save you hundreds of pounds over the life of the loan.
2. Use soft-search eligibility tools before applying. Soft searches show you which lenders are likely to accept you without leaving a mark on your credit file. Multiple hard searches in a short period signal financial stress to lenders and can lower your score, reducing your chances of approval.
3. Compare the total amount repayable, not just the APR. Two loans with the same APR can cost very different amounts if the repayment terms differ. A 5-year loan at 8% APR costs far less in total interest than a 10-year loan at the same rate, even though the monthly payment is higher.
4. Avoid extending your repayment term unnecessarily. Spreading payments over a longer period reduces your monthly outgoing but increases the total interest you pay. Choose the shortest term you can comfortably afford to minimise the overall cost of your consolidation.
5. Consider using a broker for complex situations. If you have bad credit, are self-employed, or owe more than 25,000 pounds, a broker can access specialist lenders and negotiate better terms than you would find on the high street. They also handle the paperwork and chase lenders on your behalf.

How does debt consolidation work?

Debt consolidation replaces multiple debts with a single loan, giving you one monthly payment instead of several. Here is what happens at each stage of the process.

You assess your current debts. Start by listing every debt you want to consolidate. Note the outstanding balance, interest rate, monthly payment, and any early repayment charges for each one. This total becomes the minimum amount you need to borrow. Include all forms of borrowing: credit cards, store cards, overdrafts, personal loans, and any other commitments you want to clear.

You choose between secured and unsecured. If you owe less than 25,000 pounds and have a fair to good credit score, an unsecured personal loan is usually the simplest and fastest route. For larger amounts, or if your credit history is poor, a loan secured against your property may offer better rates and a higher borrowing limit. Your advisor will explain the trade-offs so you can make an informed choice.

You apply and receive an offer. Your lender or broker assesses your income, credit history, and monthly outgoings to determine how much you can borrow and at what rate. For unsecured loans, this can take as little as 24 hours. Secured loans involve a property valuation and legal process that typically takes 4 to 8 weeks from application to completion.

Your existing debts are paid off. Once your new loan is approved and funds are released, they are used to settle your existing debts in full. Some lenders pay your creditors directly on your behalf, while others release the funds to you to distribute. Make sure every old account is marked as settled on your credit file after the debts are cleared.

You make one monthly payment. From this point forward, you have a single monthly payment at a fixed or variable rate, depending on the product you chose. Set up a direct debit to avoid missed payments, which could damage your credit score and trigger late payment charges. Over time, consistent repayments will help rebuild your credit profile.