For free and impartial money advice and guidance, visit MoneyHelper, to help you make the most of your money.


Paying a Debt Off by Borrowing Additional Money

paying a debt off by borrowing additional money uk

For free and impartial money advice and guidance, visit MoneyHelper, to help you make the most of your money.

Let’s say you’re in debt and you don’t know how to get out. 

Is it a good plan to do some additional borrowing and use the money to pay back what you currently owe? Should you be paying a debt off by borrowing additional money? 

I’ve compiled a guide on this exact situation to help you come to terms with your problem, along with an FAQs section for further clarity.

Should You Pay Off Debts With Loans? – Pros vs Cons

Before I dive deeper into this question, there’s some necessary information you should make sure you have about the two kinds of personal loans, a secured loan and an unsecured loan, and the terms associated with each.

A secured personal loan is when the borrower puts up some asset of theirs as collateral in exchange for receiving the money. When you’re paying a mortgage, it’s usually secured.

On the contrary, an unsecured loan is one where there is no collateral. These loans are generally riskier for the lender since they don’t get anything as collateral if the borrower is unable to pay. 

The real question is: Which type of loan is better for paying a debt off by borrowing additional money?

Well, if you can get a personal loan with the aim of paying a debt off by borrowing additional money at a low-interest rate, I’d say it’s the right choice! 

On the flip side, if you keep taking loans to pay off previous debts, it’s going to come back to haunt you. You’ll rack up enormous loans at very high-interest rates.

Are All Loans Bad?

Personal Loans

Personal loans may be good or bad depending on what you use them for. If you’re late in paying them, you may be hounded by collection agencies. When it comes to paying debt off by borrowing additional money, you need to look at both the interest and the repayment terms.

If the interest rate is low and if the time of repayment matches that of your original loan, I’d say taking the loan and using it to pay off what you originally owe is the right choice!

Payday Loans

To put it simply, payday loans, as the name implies, are meant to be repaid on a person’s next payday.

As per the usual norm, these are two-week-long loans that are repaid once you receive your salary.

They are small but repaying these debts can become quite bothersome, as they come with very high interest.

Credit Cards

Not only are credit cards very confusing, but they also involve hidden costs and a ton of financial baggage. Unlike student loans or a mortgage, credit cards are bad debt.

If you use more than a certain amount of credit, your credit score suffers, which in turn leads to an untrustworthy image and more credit card debt.

What you’re getting with credit card debts isn’t worth it. It may allow you to splurge in the short-term, but believe me when I tell you, the interest on those debts will come back to haunt you.

Can I Get a Loan With Bad Credit?

Yes, it is possible to get into debt even with bad credit. However, the worse your credit rating gets, the harder it gets for you to both get a loan and get good terms on that loan.

Why is that? Well, because a low credit rating indicates financial instability to potential lenders and creditors. It shows that you’ve behaved irresponsibly with money, that you’ve been late in repaying your debts, or that you’ve borrowed too much and repaid it irregularly.

There are some loans, however, that are tailor-made for individuals with bad credit, such as credit unions.

You can contact an independent debt charity such as StepChange or Payplan if you’re having trouble securing a loan. They could turn you onto some lenders you may not have been aware of or even tell you about other options you could pursue besides getting a loan.

paying a debt off by borrowing additional money uk

How to Pay Off Credit Card Debt Without a Personal Loan

There are a few ways you can pay off your card debt even without a loan.

You may utilize balance transfer credit cards. These are cards that allow you to transfer the amount you owe on one card to another card and then possibly pay it back at a lower interest rate on the other card. That way, you save a lot of money on interest spending.

Pay Off Debt Without Borrowing Money

Before I wrap up this post, let’s discuss some possible ways to pay back what you owe without more loans. There are many other ways to increase your income that could help your financial situation and thus, make it easy for you to pay off your debts.:

Explore Income Opportunities 

The first thing you need to do is to generate multiple income streams for yourself. If you’re having trouble deciding where to start, contact us, and I’ll help you.

It would be best if you stopped keeping all your eggs in one basket. The more income opportunities you avail of, the likelier you are to make regular and timely payments on your debt.

Fall Back on Your Savings

If you’re not going to be paying a debt off by borrowing additional money, you should look towards your savings and use them to pay your debts. 

If you’re working, selling your belongings and assets, and trying other things to make regular payments but still aren’t able to pay regularly, falling back on your savings may be the best option for you.

Sell Your Goods

If you have any assets or products lying around, now may be the time to sell them for some extra cash. If you aren’t paying a debt off by borrowing additional money, you should aim to sell products that you don’t need at the moment or in the near future.

Remember, this is a moment of crisis where there’s no room for luxuries. So, replacing your fancy car with a simpler one may be the best decision.

FAQs – Things to Consider Before Paying Off Debt with Loans

What is an instalment debt?

This is basically debt that is paid back in regular intervals at a fixed schedule with fixed amounts paid at each interval.

This includes student loans, your current mortgage from your mortgage lender, etc.

What is revolving debt?

This debt doesn’t entail fixed monthly payments. The payment each month depends on the balance of credit.

Is it risky to pay off debt with loans?

Yes, it can be risky to do so. However, you have several options and solutions at your disposal to reduce the risk and eventually become debt-free.

Is it a good idea to pay off small debts with one big loan?

Yes, it is a useful idea to pay off small debts and hence reduce the number of cash flows that you have to take care of each month.

As the old adage goes, the fewer targets you have to shoot at, the better you’ll score,

Final Verdict

I understand how confusing it can be when you’re paying a debt off by borrowing additional money. This guide was intended to help you figure out if you can afford to pay your debts off by taking additional loans.

If you need more help, feel free to reach out and I’ll get to you as soon as possible.


Are you struggling with debt?
Are you struggling with debt?
  • Affordable repayments
  • Reduce pressure from people you owe money to
  • Stop interest and charges from soaring