We’ve noticed so many debtors asking the internet for “debt consolidation near me” and “debt consolidation loans near me”. If you’ve been looking for local debt consolidation options across the UK, this guide is made for you.

Read on to understand more about debt consolidation loans and your nearby options. 

Debt consolidation

Debt consolidation is the process of taking out new credit to pay off multiple existing debts, usually all of the other debt you owe. For example, you might be able to take out one loan and use all of this loan amount to repay off other personal loans, credit cards, store cards, etc. Debt consolidation is only worthwhile if you can access new credit at a lower interest rate than the rate of interest payable on your current borrowing. Thus, debt consolidation can save you money!

After you pay off all your debts you now just have to make one monthly repayment to repay the new personal loan. This makes keeping on top of your finances easier. Instead of budgeting for multiple monthly repayments at various stages of the month, you now just have to budget for a single monthly repayment. 

Find your best debt solution

This 4 question debt calculator will tell you if you’re eligible.

What is the total amount of your debt?

Who should consider debt consolidation?

Debt consolidation can be beneficial to anyone with multiple sources of credit. You don’t necessarily need to be struggling to make monthly repayments to take advantage of this strategy. If you can apply for credit with a better interest than your existing debts, you can save money. 

Most debt consolidation credit providers will require the applicant to be aged 18 at least and be a UK resident. 

Before choosing to consolidate your debts, you should get free debt advice to make sure it is the most advantageous debt solution. Even if it could help there may be an even better alternative. 

Methods of debt consolidation

Debt consolidation can be achieved in more than one way. The most common methods of consolidating debts are:

  1. Debt consolidation loans
  2. Balance transfer credit card
  3. Remortgaging for debt consolidation
  4. Debt solutions, including a Debt Management Plan (although not technically consolidating it offers similar benefits) 

A debt consolidation loan is one of the most popular methods. 

What is a debt consolidation loan?

A debt consolidation loan is a unique type of personal loan where the loan amount is deposited into your current account to be exclusively used to pay back other debts. It can be used to pay off credit cards, store cards, personal loans and many other types of debt. You then repay the loan as you would any other loan, with a fixed monthly payment including interest. You can usually use a generic personal loan for debt consolidation as well, but most lenders will advertise debt consolidation loans separately. 

These loans are advertised with an APR representative example. This is the interest rate (plus any fees) you will have to pay over the course of the year. The representative APR is what at least 51% of people who applied to that lender were offered and is the rate used within the lender’s loan calculator. The interest rate you are offered may be higher or lower than the representative APR. 

Only ever apply for a loan with a lender that is authorised and regulated by the Financial Conduct Authority. 

Do banks give loans to consolidate debt?

Debt consolidation loans are offered by high-street banks, building societies and online loan providers. Most of the time you can apply for a debt consolidation loan with any of these lenders on their website. 

The eligibility criteria will state that you need to be a resident in the UK only, so anyone can apply for a debt consolidation loan as long as they live in the UK. 

There’s no need to look for a debt consolidation loan in your specific area. If you are looking for a local creditor only, then you’re more likely to be confronted with local loan sharks. These people and groups are not legal lenders and are often part of wider criminal activity. 

Who will give me a debt consolidation loan?

To be approved for a debt consolidation loan, you need to evidence that you can afford the repayments and that you have a track record of borrowing responsibly. The former will be determined by your finances and income, whereas the latter will be determined by your credit score. 

You typically need a good or excellent credit score to be given a debt consolidation loan. Remember that people who are wealthy and financially comfortable also flip to these loans to save money on interest rates. 

However, you can still manage to get a debt consolidation loan with a poor credit score from some lenders, usually those operating online rather than high-street banks. If so, you’ll probably be offered a higher interest rate than the representative APR, or maybe even the maximum APR the provider will offer anyone. If the actual APR is bigger than expected it may not be the best borrowing option for you anymore.

Before applying it’s still worth looking for mistakes on your file that could be causing your score to be lower than it should. If you see a mistake ask the responsible lender to remove it. 

Who can help with debt consolidation loans near me?

Consolidating debts can be tricky and involves a lot of complicated calculations to make sure you’re doing the right thing. It’s highly recommended that you get support from:

  1. A debt advice charity offering free and bespoke services
  2. Debt consolidation companies nearby

Debt advice charities

A debt advice charity will analyse your financial situation and personal circumstances to first make sure debt consolidating is the best available strategy. There may be more effective or efficient ways to become debt-free that you’re unaware of. 

If their knowledgeable advisors decide that debt consolidation is the best option, they can then support you in applying for loans and explaining the related processes. Debt charities are available on a national and local scale.

National debt charities include Step Change, which has a branch of the charity for people in England and Wales, and a separate branch for those in Scotland. And another well-respected national charity is National Debtline, also operating for residents throughout the UK, despite what the charity name may suggest. From Cornwall to the Shetland Islands, anyone can use these charities. 

There may also be local charities doing similar work at your nearby community centre or town council hall. 

Debt management and debt consolidation companies

Debt management and debt consolidation companies provide a comparable service to charities, but they are commercial. 

They will charge ongoing fees for their services and claim they can get you a better deal than you would secure on your own. This is a heavily contested claim and most of what they offer is available for free with a debt charity. 

Some of their services are not available through charities, but these services don’t generally relate to debt consolidation in any case.

How to find a debt consolidation company

Debt consolidation companies typically work remotely and there is no need to look for a local debt consolidation company nearby. You can browse your options online. Just remember to do some digging on each company by seeking out third party reviews and forum posts. 

If you do want to explore this option further, you may want to check out:

  1. GW Financial Solutions
  2. PayPlan
  3. NTF Financial Solutions Insolvency

This is not in any particular order and they may not be the best option. They are listed as examples of these companies only.

Will a debt consolidation loan affect my credit score?

Applying for one of these loans will cause the lender to execute a hard search on your credit file. This is a search that leaves a flag for other lenders to warn them that you have recently applied for credit. A hard search on its own will not affect your credit score. However, applying for lots of credit within a few weeks will create multiple hard search flags. This suggests that you have more serious money problems than is visible, and thus, makes lenders more cautious about lending to you. 

The only way that having a debt consolidation loan will negatively affect your credit rating is if you fail to pay back all the money and interest each month. If you miss repayments or do not make a repayment in full, your credit score will decrease, as is the case with all debts. 

Alternative options to debt consolidation

If your circumstances don’t allow you to borrow more credit, you could consider a Debt Management Plan. Earlier we listed this as an alternative to consolidating. 

It’s not 100% the same because a DMP does not require you to take out more credit and pay off debts. The benefit of this means no credit history will be checked. Instead, it is an agreement with multiple creditors to allow you to make one payment that is proportionally divided between them. 

One of the debt charities mentioned above can help you arrange a DMP – and so can the commercial management companies at a cost. 

Money Nerd’s debt consolidation guides are here!

The logic of debt consolidation is straightforward, but working out if it’s a good idea is not always easy. It brings up lots of the same questions that debtors need to know the answer to before deciding. Money Nerd has recognised this and answered the most asked debt consolidation questions. Grab a coffee and browse our website now to read our popular debt consolidation help guides! 

About the author

Scott Nelson

Scott Nelson is a financial services expert, with over 10 years’ experience in the industry, including 6 years in FCA regulated companies. Read more
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