Debt Consolidation Loans for Bad Credit UK – 2023 Review
Table of Contents
- What is debt consolidation? Jump
- How does debt consolidation work? Jump
- What is a debt consolidation loan? Jump
- Is it a good idea to get a debt consolidation loan? Jump
- What are the cons of a debt consolidation loan? Jump
- Can I get a debt consolidation loan with bad credit? Jump
- Debt consolidation loan comparison Jump
- How to get a debt consolidation loan with bad credit Jump
- Where to get a debt consolidation loan with bad credit Jump
- Debt consolidation loans for bad credit UK Jump
- Will a bad credit debt consolidation loan impact your credit score? Jump
- Can I get a guarantor loan for debt consolidation? Jump
- Rejected for a loan? Consider a DMP instead! Jump
- More bad credit debt consolidation loan info Jump
Are you looking for a way to manage your debts? This guide is here to help. We’ll talk about something called debt consolidation loans, which can be a good way for people with bad credit in the UK to handle their debts. Here’s what we’ll cover:
- What a debt consolidation loan is.
- The true cost of a bad debt consolidation loan.
- How a debt consolidation loan works.
- Where to get a debt consolidation loan with bad credit.
- The pros and cons of getting a debt consolidation loan.
Our website offers guidance to more than 170,000 people each month on money matters. We understand that dealing with unpaid debt can be worrying, but don’t forget that you’re not alone. There are many ways to manage debt, and we’re here to help you understand them.
Let’s get started and learn more about debt consolidation loans for bad credit in the UK.
What is debt consolidation?
The true cost of a bad debt consolidation loan
Think about this.
If you get a £30,000 debt consolidation loan at 4% on a 15 year term, it’ll cost you £221 per month to pay back. That exact same loan at 5% is about £18 per month more expensive.
Well, that’s a full £2,916 more expensive over the entire term.
Fill out the short form below to access the best debt consolidation loan rates available from the UK’s leading lenders.
How does debt consolidation work?
What is a debt consolidation loan?
Free Debt Consolidation Loan Quote
There are A LOT of debt consolidation loan lenders and you need to get the right deal.
I’ve teamed up with Loans Warehouse to find you the right deal for you.
In partnership with Loans Warehouse
Is it a good idea to get a debt consolidation loan?
How much can I borrow?
What are the cons of a debt consolidation loan?
- Consider that the loan you are taking out to cover your outstanding debts is going to be a sum of all your outstanding totals combined. Therefore, you should be confident that you can consistently afford this new monthly amount to prevent further damage to your credit file.
- Consider that not everyone is guaranteed to be accepted for a debt consolidation loan. Being denied one can cause your credit score to worsen. Whilst not all debt consolidation loans require a good credit score, you should ensure that you are eligible.
- Consider that debt consolidation loans aren’t always a cheaper alternative as you are not guaranteed a lower interest rate. You may even be charged further costs or fees. Therefore, the loan overall may cost you more than your current outstanding debts. Be sure to check terms and rates first.
Can I get a debt consolidation loan with bad credit?
Debt consolidation loan comparison
To compare debt consolidation loans between different lenders, you can use the representative APR.
This is the rate that at least 51% of applicants received, but it doesn’t mean you’ll be offered this rate. So take it with a pinch of salt.
Many online websites provide a debt consolidation comparison function to make things easier. Don’t rely on these entirely, as they may not have been updated, and you could miss a better deal.
If you want to compare debt consolidation loans with a poor credit score, you may want to consider each lender’s maximum APR as well. This is the maximum interest and fees you can be charged if approved for the loan.
How to get a debt consolidation loan with bad credit
There is no magic formula to get a UK debt consolidation loan with a poor credit score. But there are some things you can do to make sure you’re looking in the right places.
The best way to get a debt consolidation loan with bad credit in the UK is to apply to lenders that are more likely to accept people with bad credit.
You can also increase your chances by trying to make some quick fixes to your score. The most effective way to improve your credit score is to look for mistakes in your credit history.
If there is an error, you can ask the lender responsible for the error to remove it, and if they refuse, you can ask the credit reference agency to do it for them.
You should also register on the electoral roll, as this verifies your ID and can positively affect your credit score.
Feeling like Chandler?
All of this information can feel a bit overwhelming.
Don’t panic! There’s plenty of help available.
After lots of research, I decided to partner with Loans Warehouse. They’re an award-winning service who can help find the right loan for you.
You can find out what’s available for you below.
Where to get a debt consolidation loan with bad credit
Most high-street banks are likely to reject people with bad credit because they have the lowest representative rates on the market (generally).
Debt consolidation loans for those with a bad credit score are usually advertised more prominently by online lenders, although not exclusively.
Let’s look at some examples.
Debt consolidation loans for bad credit UK
Below are five examples of unsecured loan providers advertising debt consolidation loans for people with a bad credit history.
These are not necessarily the best on the market or in a particular order. They’ve been provided as examples of what’s available – and they may be worth considering.
#1: Finio Loans
Finio Loans (formerly Likely Loans) are currently advertising bad credit debt consolidation loans with a representative 39.9% APR. They provide credit from £500 to £5,000, repayable over one, two or three years.
#2: Shawbrook Bank
Shawbrook Bank offers personal debt consolidation loans with a representative APR of 16.6%. They also offer repayment periods of up to seven years, which is longer than many other loan providers.
#3: Everyday Loans
Everyday loans are another option, offering generic personal loans for people with a bad credit history. These loans can be used to consolidate debts. They currently have a representative 99.9% APR.
#4: Solution Loans
Solution loans offer short-term loans up to £2,000 and larger personal loans up to £25,000 for the purpose of consolidating debts.
They specifically advertise them for people with an unsatisfactory or poor credit rating. Their representative APR is 14.3% (variable).
Pegasus offers these loans for people with poor credit and has some of the best customer reviews on the market, even recognised by some big newspapers and finance institutions.
They also claim to provide the funds within an hour of approval. You can borrow from £2,000 to £15,000 only. Their representative APR is 14.9%, but you must apply to see what you can get.
Will a bad credit debt consolidation loan impact your credit score?
Applying for one of these loans will not significantly impact your credit score.
However, applying for many of these loans consecutively could alert lenders and cause your application to be rejected.
You can only seriously damage your rating if you fail to repay the loan amount in full and on time. If you don’t, the lender can record payment defaults on your record.
Can I get a guarantor loan for debt consolidation?
An alternative option to a debt consolidation loan for people with bad credit is to look for one of these loans with a guarantor.
If the person fails to make their monthly payments on time and in full, it will also be the guarantor’s responsibility. This is why most guarantors are family members or very close friends.
The guarantor must be someone with a good credit rating or a homeowner in the UK. Usually, they are of a certain age, such as between 25 and 50.
If your credit report is hindering you from getting a personal loan alone, this could be a good alternative.
I rejected a lot of companies
I spent a long time searching for a debt consolidation loan company that my readers could trust.
Loans Warehouse were the best by far.
Tap below to get your free debt consolidation loan quote from them now.
Ps. It won’t affect your credit score.
In partnership with Loans Warehouse
Rejected for a loan? Consider a DMP instead!
And if you cannot get approved for any unsecured loans, a Debt Management Plan is another option.
Debt Management Plans are considered a way to consolidate debts without actually consolidating them.
They work by getting multiple creditors to agree to a plan where you make a single monthly payment, which is then split between everyone you owe.
Within the plan, you may even be able to agree for creditors to freeze interest to save you money.
Since you don’t pay any creditors off in this solution, you don’t need to apply for more credit and have your credit score assessed.
The only downside is that if you start making underpayments, creditors can report these as partial payments. This will negatively affect your credit score.
We have more tips on DMPs and how best to use them to get rid of pesky creditors.
More bad credit debt consolidation loan info
For more information and answers to common debt consolidation questions, see our other guides and tips.
We’ve recently published scores of articles on this topic to help you. And don’t forget that debt charities can provide a personalised support service.