Debt Consolidation Companies – Comparisons, Reviews, Guide, FAQs & More

Before opting for a debt consolidation company you might want to have all the relevant information. To get a better quote and lower interest rate, this guide is going to help you. 

From debt consolidation to which company is the best, I am going to cover it all!

Debt Consolidation Loans – How do They Work?

Debt consolidation loans are a refinancing technique which helps to combine various debts into one. The debt consolidation loan will work as the one major debt, the amount you receive would be used to pay the other debts you have.

Consolidation is usually used to cut out higher interest rate debts, such as credit cards and short term debts. The average interest payout of a debt consolidation loan will be fairly lower than the aggregate interest payments you make for several debts. 

Consolidating debt will also help you to improve your credit rating and pay the debts at a faster rate, due to the standard monthly payment system of consolidation loans. 

There are several companies for consolidation of debt to select the right one. You must be well equipped with the relevant information. 

debt consolidation companies

What are Debt Consolidation Companies?

In order to consolidate your debts, you will need a hefty amount. Consolidation businesses play an important part in providing you with the money which shall be used in debt consolidation

These organizations will provide you with new lending tailored specifically to your debt needs and their repayments. In this way, you will be able to pay off your existing debts and create just one debt towards the lending institution. 

The financial conduct authority of the institution will review your application, your credit score, your payment history, and your financial position and after the approval of your request, you shall be able to take out the credit. 

How to Select the Right Consolidation Company?

Selecting the company from which you are going to credit the money can be a tricky task but I am going to tell you all about how to choose the right one. 

Many factors play an important part while selecting a debt company. First and foremost, you will have to list down your needs and demands that you might want to address at the time of taking out a debt consolidation loan.

Secondly, you need to review your financial position and your historic record yourself too. If you have a bad credit score, adjust your demands accordingly. However, having a bad credit history doesn’t mean you should make an impulsive decision.

Factors to Compare While Selecting a Debt Consolidation Loan

Few major factors hold much importance while deciding where to get the loan from, but for some people, other terms and conditions might be of importance. It all depends on your situation and needs. 

Interest rate 

Usually, the interest rate is based on multiple factors, such as your credit scoring, amount of lending, and its payback period. Apart from these things, some lending businesses have a fixed slab of the interest rate.

You will need to look for the one that offers the best interest rate among all. 

Costs and fees

There are many costs included while applying for debt consolidation loans like the upfront payments of application, deposit costs, and other sundry expenses. If you are on a tight budget, look for the company which offers lower costs than its competitors. 

Payback Period 

Different institutions will cater you according to their terms and policies. The payment period for the same amount of loan may differ between several organizations too. Revise your financial planning and conclusively decide which company is per your payment period plan. 

Services Offered

You might want to get a good look at the company services

Some only provide you with a loan to consolidate your debt but others might propose a full debt management plan with varying costs according to the service opted, of course. Make sure you select the right service for yourself. 

Top 5 Debt Consolidation Companies – Comparisons & Reviews

debt consolidation companies
  1. TSB 

TSB offers a lucrative offer of availing credit amounts ranging from £1000-£25000. The company provides you with many added benefits and solutions to consolidate your debt. 

First of all, TSB has their online debt calculator which will help you to get a personalized quotation for the loan. 

The maximum rate of APR is 39.9% but the interest rate will vary according to your quotation. You can make monthly payments on the date of your choice and you can also make overpayments in any month. The payback period has a window of 1 to 7 years. 

The best part about TSB loan is that you can avail the skipping of payment up to 3 months. However, this offer has some terms and conditions applied to it. 

There are some eligibility requirements. For example, the borrower must be a resident of the UK over the age of 18 and registered in England. 

Get a quote from TSB by clicking here

  1. Post Office Money 

Post office money was the winner of the Moneyfacts award in 2018. Hailed as one of the top lending institutions of England as well, they provide you with an opportunity to take out a debt consolidation loan, amounting from £1000-£25000

This company has a fixed APR rate of 8.9% on a debt consolidation loan of £3000-£4999. The time to pay the amount back will differ according to the loan but they have a slab of 1 to 7 years

Post office money provides you with instant transfer of the credit amount. You can also manage and see your monthly payments, progress, and remaining payments by using their online tools. 

They also offer you an early settlement offer which will reduce your overall interest cost, thus saving you quite a few bucks. 

  1. Freedom Finance

A unique selling proposition of freedom finance is that it gives out loans on an APR of as low as 3.4% APR. They also promise to provide a quick service and tailor the quotation according to your demands, you can also get a decision from them within minutes. 

They provide both: secured loans and unsecured loans. The secured loan comes at a relatively lower interest rate. The payback period will be decided once you get a quotation from the company. To do that, you can go here.  

  1. Monevo 

Monevo has been a winner of several different awards, the company has grown rapidly in recent years. They are providing many types of personal loans. Monevo, along with debt consolidation loans, also provides debt management guides and advice. 

You can avail a loan amount up to  £50000 with the payback period of above 5 years. Monevo provides excellent customer care service and they also have decent online debt management tools.  

  1. Aspire Money 

Aspire money will answer all your questions regarding the consolidation of loans and provide you with the best possible package for your needs. 

The company is a credit brokerage and not a direct lender, but they will make sure to find the best loans at the lowest possible APR rates. 

This brokerage firm also takes relatively small commission fees and other miscellaneous expenses. The firm will help you secure a loan quite easily with the help of their technical assistance. 

All of these institutions are authorised and regulated by the financial conduct authority of the UK. You will have to analyse the pros and cons of each company and pick out the best one for yourself. 

How Does Credit Matter When Getting a Consolidation Loan?

Credit rating is very important to get any loan or more specifically a consolidation loan. The company which will loan you the money needs to make sure that you can repay it. 

Your credit history and score are your impressions towards any lending institution. While granting you the loan, the company will put a great emphasis on your credit score. 

Do Consolidation Loans Hurt Your Credit Score?

It depends on how you manage them. If you don’t make monthly payments and adopt bad payment habits, it might hurt your credit score. 

Consolidation loans on the other hand also provide an amazing opportunity to improve your credit score, as you have to manage a single debt consolidation loan instead of various debts. It can be an easy opportunity to correct your bad credit score.

FAQs

Do debt consolidation companies work?

Of course! According to surveys, the figure shows that around 68% of people who consolidated their debts using a consolidation company were able to improve their credit score. 

How much debt can I consolidate?

You can consolidate your major and small debts, but I would recommend you consolidate only the high-interest debts, such as credit cards. It also depends on the company, how much are they willing to loan. 

How long does it take for a consolidation debt to get approved?

The normal approval period is 30 to 90 days, if your loan hasn’t been approved within 90 days, you should contact the lending institution. 

What is better: debt consolidation or personal loan?

It depends on your preferences and demands. Personal loans are usually taken out for personal needs and on the other hand debt consolidation loans are to manage your debts by refinancing them.

Can I get a personal loan with a credit score of 550?

The starting rate for personal loans is 585, so it might be difficult. You might get a secured loan if you provide collateral or security for it. 

What other options do I have to consolidate debts?

Direct lending or a personal loan is another option that you can use for debt consolidation.  

How long will a consolidation loan stay on my credit report?

It will stay on your report for up to 10 years. 

Final Thoughts

Managing debt consolidation loans require some technical information and for selecting the right company you need to have a complete analysis of the market. 

I hope with all the information provided in this guide, you will be able to opt for the right company to get rid of bad credit. If you have any questions, feel free to reach out!


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