Skip to content

How to Consolidate Debt

There are multiple ways to consolidate debt in the UK. From debt consolidation loans to IVA’s, Consolidation Express explains how to consolidate.
An image of 3 cogs with a pound sign

You can consolidate debts in multiple ways in the UK. To name a few, you can take out a consolidation loan, an IVA, or a debt management plan. Although other solutions will help with your debt situation, these are the main solutions that allow debt to be consolidated into affordable, monthly payments.

If you think you may be interested in a debt consolidation loan, let’s look at some key information you should know before applying:

Apply for Debt Consolidation

How to Consolidate Debt Step by Step

01. Step one

Evaluate the debt solutions that are available to you. Some in the UK include debt consolidation loans, IVAs, debt management plans, debt relief orders, and bankruptcy. All of these solutions allow people to effectively deal with their existing debts, but each solution comes with bespoke benefits and considerations that people should take into account.

02. Step two

If you think getting a loan to pay off outstanding debts is the best option for you, complete our online questionnaire. Our debt consolidation loans allow people to repay their debt in affordable monthly payments.

Bad credit score? Low credit rating? You can still apply for a debt consolidation loan from Consolidation Express. This is because your credit history is not the only factor that determines approval for a debt consolidation loan from us.

03. Step three

The details of your online application will be checked by our team to make sure that all the information is correct. Do not worry – our team will only run a soft credit check at this point – this will not affect your credit score.

From here we will be able to let you know if you have been accepted for a debt consolidation loan.

04. Step four

If approved, you could have all the money you need to consolidate all your existing debts into one monthly repayment. This means that you would only owe money to one creditor, making your finances much easier to manage!

Consolidate Debt

When should you consider a Debt Consolidation Loan?

A woman and a road splitting into two roads.

You should consider looking into debt consolidation loans as a debt solution if any of the following applies to your situation:

  • You have multiple debts to different lenders.
  • Making repayments is hard because there are so many to manage.
  • You have missed payments.
  • Existing debt is making it difficult to pay for basic things, such as household bills.
  • You would not mind repaying your existing debt over a longer period if it means you pay less interest.
  • Interest rates make it difficult to pay your debt off in full and make you feel like your financial situation is just getting worse.
Apply for Debt Consolidation

It is important to note that the deciding factor for taking a debt consolidation should be how much interest you are being charged on it. You should compare the loans available to you and the APR% offered on them to ensure that a debt consolidation loan would mean you save money in the long run.

If you would pay less interest on a debt consolidation loan than you pay on your current debts then it might make financial sense to take out a new loan.

How do Debt Consolidation Loans work?

Debt consolidation loans work when a person takes out a new loan that is equal to or larger than their existing debts. The new loan amount is then used to pay all debts and existing loans early and in full.

In doing this, debts should be easier to manage. This is because the borrower now has only one lender to deal with and just one monthly repayment to manage. This means payments are less likely to be missed and so you are less likely to be charged extra fees.

Debt consolidation loans are more suitable for people if the interest rate on the debt consolidation loan is less than those of the existing debts combined. In this instance, borrowers will need to pay their creditors less money in the long run.

Fill out our online application to see if you qualify.

Apply for a Debt Consolidation Loan

What are the benefits of Debt Consolidation Loans?

A man and woman holding 'Pros' and 'Cons' books.

Consolidating debts with a debt consolidation loan could allow borrowers to benefit from:

  • Lower monthly payments.
  • Fewer payments to manage (just one loan to repay!)
  • Lower interest rate depending on the Annual Percentage Rate offered.
  • A longer time to get your financial future in order.
  • A chance to improve your credit score.

Alternative Debt Solutions

Debt Management Plans

A Debt Management Plan is an informal solution for unsecured and non-priority debt. Like debt consolidation loans, a debt management plan allows people to combine their monthly repayments into one affordable monthly payment.

With Debt Management Plans, a company usually acts on the borrower’s advice to negotiate for interest rates to be frozen. However due to the informal nature of this solution, this is not guaranteed.

With Debt Management Plans it does not matter how much debt you have. Anyone can qualify for this solution, but it is arguably most suited to people with lower levels of debt.

Individual Voluntary Arrangement (IVA)

An IVA is a formal agreement designed to reduce a borrower’s monthly repayments. This debt solution freezes interest and charges on any debts included in the IVA preventing creditors from harassing you for payments. Also, if a person makes it to the end of their IVA (usually around 6 years after the start date), any remaining debt is written off.

An IVA can only cover unsecured debts like credit card debt and personal loan debt. Therefore, if you think this debt solution may be your best option but you have a secured loan you are struggling to repay, you would need to find alternative arrangements to deal with this.

To qualify for this form of debt consolidation you must:

  • Have at least £6,000 of unsecured debt.
  • A regular income.
  • Creditors that would rather you have an IVA than file for Bankruptcy.
  • Live in England, Wales, or Northern Ireland.

Debt Relief Order (DRO)

A Debt Relief Order (DRO) is a good solution for people who cannot repay a relatively low amount of debt. It freezes debt repayments and interest charges for 12 months, which means that despite the interest rate on your debts, borrowers on a DRO will not see their debt level rise. Once the 12 months are up, if any debts can not be paid they will be written off.

Similar to an IVA, this debt solution is not available to people who reside in Scotland.

Debt Relief Order (DRO)

If you are struggling to repay a large amount of debt it could be that bankruptcy is the best option for you. This would clear your debts but will be visible on your credit report. This will likely make obtaining any form of credit difficult for quite some time.

Are there fees and charges for Debt Consolidation Loans?

Some fees and charges come with a debt consolidation loan, with each coming with its own interest rates, fees, payment plans, and fine prints.

A Debt consolidation loan cost can vary depending on a variety of factors. Some examples of things that can affect the cost of a debt consolidation loan include:

  • The lender you chose to go with.
  • The interest rate you are offered.
  • Your credit score.
  • What type of debt consolidation loan you choose. (e.g. secured debt consolidation loan or unsecured debt consolidation loan).
  • If you miss any repayments.
  • How long your selected repayment period is.

Should you choose to get a debt consolidation loan from Consolidation Express, all of these charges and fees will be clearly outlined and explained to you. You will only be accepted debt consolidation with us if it is a suitable and affordable option for you.

A computer screen with an Apply button.

Consolidate existing debts with Consolidation Express

Consolidate all your debts with a debt consolidation loan from Consolidation Express.

Why choose us?

  • We consider all credit histories.
  • We may be able to reduce your monthly repayments.
  • We are rated a 4.7/5 on FEEFO for our excellent customer service.*
  • We are regulated by the Financial Conduct Authority.
Consolidate Your Debts

* Consolidation Express Average FEEFO Rating as of May 2022.

An advisor pointing to a screen displaying Rep APR.

APRs from 5.8% to 89.9%

We are a broker, not a lender.

Unsecured Loan Representative 69.9% APR

Borrowing £7,500 over 36 months, repaying £502 per month, total repayable £18,083. Total cost of credit £10,583. Interest rate 69.9% (variable). The lenders on our panel offer loans for 12-60 months, with rates from 5.8% APR to 89.9% APR. The Representative Example is based on all loans paid out by lenders between 19th Apr 2022 and 23rd Dec 2022.

Secured Representative 11.7% APR

If you choose to add fees to the loan: Assumed borrowing of £25,000 over 120 months, plus a broker fee of £2,500 and a lender fee of £250 would result in monthly repayments of £345.55, the borrowing rate is 8.6% (variable), the APRC is 11.7% (variable), total charge for credit £16,466.00 and the total amount payable £41,466.00. You can opt to pay the lender and/or broker fees upfront, your adviser will discuss these options with you.

Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on a mortgage or any debt secured on it. All rates vary subject to loan amount, loan type and status. Repaying your debt over a longer period of time may increase the amount you pay.

Further reading

What are the Different Kinds of Unsecured Loans?

Understand what an unsecured loan is, and how best to use the different kinds of unsecured loans in 2023.

What are the Different Types of Secured Loans?

With so many different types of loans available, it can be difficult to know which is right for you. For more information on secured loans, read this expert article.

Persistent Debt – What Does it Mean for Your Credit?

Persistent debt can affect your credit rating for a significant time period. Read to find out more.