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Debt Consolidation Loans

Sometimes taking out credit can be a short-term solution when your circumstances change unexpectedly. However, borrowing from different lenders can lead to multiple debts if you struggle with repayments, which can lead to feeling overwhelmed or anxious.

One solution to this situation is a debt consolidation loan, which can help you settle your debts with various lenders and ease the anxiety you encounter with them. If this sounds like something you may need, read on to find out more about debt consolidation loans, and see if they are right for you.

What is debt consolidation?

Debt consolidation is the process of taking out new credit to pay off existing credit. In other words, taking out a debt consolidation loan to pay off existing loans or debts.

Debt consolidation loans are designed so that you only have one company to pay back, instead of multiple companies which you may have borrowed from. A debt consolidation loan is used to group together all outstanding repayments into one so that they are easier to manage.

Can I get a debt consolidation loan with bad credit?

Everyone’s credit file is different, and it is possible that for those with extremely poor credit, the amount of interest charged on top of your debt consolidation loan may be higher than the standard interest rate.

Is debt consolidation a good idea?

Consolidating debt is not always right for everyone. It is crucial that you carefully review your circumstances if you are considering a debt consolidation loan.

Debt consolidation loans are useful because you are only dealing with one company, where you are only making one regular repayment.

Using a debt consolidation loan may also help reduce the amount of interest you pay on borrowing. Grouping together your outstanding payments to different lenders would mean that you only have to make interest payments to one lender, which may cost less than the interest from the lenders you currently have outstanding payments for.

Sometimes borrowing over a long-term period can result in paying back more, but in lower instalments, making the loan more manageable for some. Make sure that you check and compare interest rates properly before using a debt consolidation loan, so that you know it’s the right choice for you.

Does Dot Dot Loans offer debt consolidation loans?

If you are worried about debt(s), you can also access PayPlan’s free, confidential advice service - which is available to anyone worried about money and can help reduce the amount you’re paying towards your debts each month. You can get help online or over the phone with PayPlan.

Debt consolidation loans information hub

Want to know more about debt consolidation loans? We’ve answered some of the most common questions to help you make the right decision for your situation.

Who is a debt consolidation loan for?

Debt consolidation loans are for those who wish to pay off multiple debts from different lenders, so that they only need to repay one lender. A debt consolidation loan is used to group together multiple debts.

When is a debt consolidation loan a good idea?

These loan types can help if you are struggling to manage your different debts and would find it easier to just owe repayments to one lender. A debt consolidation loan may also have a lower interest rate than your current outstanding loans.

What if I have limited credit history?

Limited credit history is when you have no evidence of making credit repayments, which can be just as damaging as a low credit score and may even restrict you from taking out a very bad credit loan.

What if I am declined for a debt consolidation loan?

Debts may cause you to experience feelings of stress or anxiety, especially if you are unable to take out further credit in the form of a debt consolidation loan.

Don’t worry, there are many free resources which can help you manage your debt, meaning that you may not need to take out a debt consolidation loan and increase your debts. Here at Dot Dot, we highly recommend using:

  • StepChange – You can get free, online debt advice from StepChange. They can advise you on managing your debts, and managing your finances to avoid further debt. StepChange also provides plenty of information around consolidating debts, which can be seen in their debt consolidation guide.
  • MoneyHelper – Here, you can get free, impartial advice around any financial difficulties you may experience. MoneyHelper can arrange for you to speak with a debt advisor, either online, over the phone, or face-to-face. Their debt advisor locator tool will help assign you to an advisor for free.
  • Citizens Advice – You can get free advice for any of your concerns from Citizens Advice. They have plenty of information surrounding debt and money which is completely accessible to everyone. This can be seen on their webpage.
  • National Debtline – If you are worried about debt, or considering debt consolidation, you can seek free guidance from National Debtline who specialise in helping people in the UK with financial difficulties.

For general budgeting and money management tips, you can also visit our blog. However, it is highly recommended that you use the resources listed above if you are considering debt consolidation.

How can Dot Dot Loans help?

We care about our customers and encourage you to stay as well informed as possible when considering any kind of loan. If you are struggling with debt, we strongly recommend that you think about the resources recommended above. Whether you are looking into debt consolidation or have any other financial worries, seeking free and professional advice always helps.

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