Should I get a loan to consolidate debt?

Taking out a loan to consolidate debt may be worth considering if you want to combine multiple debts into one – and if you’ll save money by doing so. You’ll need to check if you’re eligible for lower interest rates and decide whether you want a secured or unsecured debt consolidation loan.

6 min read
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Should I get a personal loan to consolidate debt?  

A personal loan (also known as an unsecured loan) might be the best option for debt consolidation if you: 

  • aren’t a homeowner or don’t want to risk your home – secured loans usually require you to use your home as collateral, whereas a personal loan doesn’t require any collateral
  • need to borrow £15,000 or lessunsecured lenders sometimes offer up to this amount, but they usually offer less as they don’t have your home as security. Remember to only borrow as much as you need, otherwise, you could end up overstretching yourself
  • have a good credit score – the best personal loan deals are often only available to people with a good credit history, although you may still find a loan with a less-than-perfect credit score - but higher interest rates may apply
  • need to access the money quickly – you can usually acquire a personal loan faster than a secured loan, as there is less paperwork involved

Should I get a secured loan to consolidate debt? 

You could consider getting a secured debt consolidation loan, which is tied to your property, but there are several factors that you need to think about first.

Like a personal loan, you use the secured loan to pay off your debts. In this way, you combine your debt into one, single monthly repayment to the secured lender.

However, secured loans require you to use an asset as collateral – usually your home if you’re a homeowner. If you fall behind with your repayments, the lender could (in the worst-case scenario) repossess your property to claim back unpaid funds. This added layer of protection for the lender means you can usually borrow larger amounts with a secured loan compared to an unsecured loan.

A secured loan might be a good way to consolidate your debt if you: 

  • are a homeowner and are happy to secure your loan against a home – most secured loans require you to secure them against a property you own
  • need to borrow a large amount of money – secured loans tend to go up to around £500,000
  • have a bad credit score – it might be easier to get accepted for a secured loan than other types of credit if you have bad credit, as your home is used as collateral which offsets some of the risk to the lender
  • don’t need the money straight away – a secured loan can take longer to process than a personal loan or credit card, due to the amount of paperwork involved
  • want a longer loan term – secured loans offer long repayment periods, potentially making the monthly repayments more manageable. Bear in mind though, longer loan terms can lead to you paying more interest overall

Should I get a loan to consolidate credit card debt?   

A debt consolidation loan would allow you to move your credit card debt into a single place, making the repayments easier to manage. You could get either a secured or unsecured loan to do this.

Before deciding which type of loan you want, consider the advantages and disadvantages of using a loan to consolidate debt.


  • you’re moving your debt to a single repayment, which may be less stressful and more manageable than having multiple repayments going out each month
  • if you get a lower interest rate than the total interest you’re currently paying, it could make your debt more affordable
  • there’s the potential to become debt free faster if you can pay off the loan over a shorter period. Just remember to only agree to a loan term where you can afford the repayments


  • you may end up paying more in interest if you have a bad credit score. Look into the total cost of the loan you’re considering before you apply
  • if you miss the repayments, you’ll be charged late fees and your credit score will be damaged, which could impact your ability to get credit in the future. If you fall behind on a secured loan, your home could be repossessed (as a last resort)
  • if you take out a loan with a longer repayment period than your credit cards, you’ll be in debt for longer and you may be increasing the amount you repay in total

Are there loans to pay off debt for people with bad credit?   

Yes, there are debt consolidation loans for bad credit.

There are providers who specialise in lending to people with a poor or thin credit history. But you may find yourself only eligible for high interest rates and have less choice available to you.

In this case, you could end up paying more in interest than you’re currently paying. There might be another solution that suits your financial circumstances better.

How to get a loan to pay off debt   

  1. work out how much you need to borrow - this is crucial because you’ll need a loan that covers your total outstanding balances, otherwise you’d just be adding another debt to the pile
  2. research for the best deal you can get - by looking online, using comparison websites and speaking to lenders directly
  3. use a loan calculator to see whether you’re likely to get accepted before you apply. This stops you from damaging your credit score by making an application, getting rejected, then having to apply for another loan
  4. apply for the loan - make sure you have all your information to hand, like address history and bank and credit account information
  5. use the loan to pay off your debt immediately - that way you won’t be tempted to spend it on something else

How to pay off debt fast without a loan   

There are some other ways you can pay off your debt without getting a debt consolidation loan. Have a look at these and see if any of them would suit you better.

Balance transfer card 

A balance transfer credit card is where you combine debt into a single monthly repayment on a credit card instead of a loan. Some of them have 0% interest rates, but these are usually only for an introductory period. So, you may find yourself with a high interest rate once the deal ends (unless you clear your balance in full before this point). You should also look out for balance transfer fees.


If you only owe a very small amount, you could use your bank account overdraft to combine debt. Depending on your deal with your bank (and whether you’re able to get an overdraft if you don’t currently have one), this could be a cheaper way to pay off your debt. Just be aware that an overdraft is still debt, interest may apply, and you still need to pay it off.


This can be an effective way of paying your debt off fast. With the snowball method you pay off your debts one at a time, starting with the smallest first. Every time you pay off a debt, you have a bit more money to put towards the next smallest one. Continue in this way until you’ve paid off all your debt.

Remember to still make the minimum repayments on your other debt with focusing on clearing the smallest one. Otherwise, you face late payment fees and damage to your credit score.

Get debt advice

If you’re struggling with debt, you may want to speak to a specialist adviser. Either contact your local Citizen’s Advice, who can tell you where to go, or speak to a debt charity like StepChange for free, confidential debt advice. 

Disclaimer: All information and links are correct at the time of publishing.