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Are you looking to consolidate your debts?

Are you looking to consolidate your debts?

Category: Loans

Updated: 27/01/2015
First Published: 27/01/2015

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

If you're finding it hard to keep up with your credit repayments – whether that's the monthly cost or the difficulty of coordinating so many payment dates – it could be time to consolidate with a single personal loan. It can make things a whole lot simpler and could give you a clear route out of debt, so is it time to take the plunge?

Why consolidate?

Many people choose to consolidate for the simple reason that it's cheaper and easier to manage. You'll have one monthly repayment rather than several, making it less likely that you'll miss a payment, and if you choose the right deal, you could end up paying less in the long run. The amount of interest you'll pay on a personal loan will invariably be less than that for a standard credit card, and as an added bonus, you'll have a clear route out of debt.

Personal loans have a set term, a set monthly repayment and a set end date, so once it's all arranged, you'll know exactly how much you'll have to pay each month and when your commitments will come to an end. By that point, your debt will be cleared – there isn't the option of only paying a minimum monthly amount, as with credit cards, so as long as you don't spend on credit elsewhere, you can be confident that you'll soon be out of the cycle.

It seems that taking out personal loans for the purpose of debt consolidation is a growing trend, too. Analysis from Sainsbury's Bank Loans has suggested that around 33% of all personal loans taken out in the first three months of 2015 will be for this very purpose, with the average loan size for debt consolidation estimated to be around £10,300.

Start the process

The first thing you need to do is take a cold, hard look at your credit commitments so you can determine whether debt consolidation will be the right solution, and if so, how much you'll need to borrow. It's important to make sure that you won't be worse off as a result – the whole point of consolidating debts is to make things more manageable – so make sure to take things like fees and overall interest payments into account as you start your search.

Ideally you'll want to reduce your monthly repayments and simplify things with one provider, but make sure you've got a real advantage to moving. Find a few loan options and work out how much interest you'll pay by the end of the term, and if it'll be lower – or at least comparable – than the amount you're currently paying, it could be worth looking a little closer.

Then it's time to get serious, and it all comes down to finding the right product to suit your circumstances. Using our handy loan calculator would be a great place to start – simply say how much you want to borrow and the length of the term you're looking for, and the calculator will tell you the best interest rates available and how much your monthly repayments would be. You can even search according to your credit rating, giving you a better understanding of the price you'll have to pay. So, why put up with multiple repayment dates and sky-high interest payments? Start thinking about consolidating and you could soon have a manageable way to become debt-free.

What next?

Why not try our loan calculator

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Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.