A good rule of thumb is: debt consolidation is not a good option if your debt is more than 50 percent of your income.
It is also not a fit if you do not have a consistent source of income that more than covers your monthly payment.
Use our loan calculator to find the right debt consolidation loan for you based on your current debt calculation. If you're struggling with excessive mothly payments, you may be able to arrange a new payment plan or a 'repayment holiday'.You could also use our Quick Quote tool to find out if you're likely to be approved for a loan, how much you could borrow, the interest rate and your monthly repayment amount. Finally, bad credit can keep you from getting a good interest rate, which negates the main purpose of a debt consolidation loan.But obtaining debt consolidation loans with bad credit is possible if you fall into that category.It is less common with credit or store cards but more common with loans.
If an ERC applies, remember to take it into account when working out the cost of a new loan. Check all outstanding balances, interest rates and any penalties for paying off the debt early. The interest you receive on your savings might be lower than the interest you pay on a loan so you might want to consider paying off your existing debt with any savings you have.
However, you need to look at all of the relevant issues as loan consolidation may not be right or available for you.
In the simplest terms, a debt consolidation loan will pay off your existing debts and transfer the monies owed into one loan with one manageable, monthly repayment.
To see if you are eligible for their loan, a lender will look at how much debt you have outstanding and your credit risk.
If you have a previous history of bad credit or large debts, a lender may only consider offering a secured loan.
We are a nation of debtors, Britain owes over £1 trillion.