Unsecured Debt Consolidation Loans for Bad Credit

“If you’re looking for a way to handle your debts, this is the right place for you. In this piece, we’ll talk about unsecured debt consolidation loans for bad credit. We’ll be answering the following questions:

• What is debt consolidation?
• How much will a bad debt consolidation loan cost?
• How can you get an unsecured consolidation loan for bad credit?
• What debts can you clear up with a consolidation loan?
• Is a consolidation loan the right choice for you?

Every month, over 170,000 people come to our website for advice on money matters. We understand your worries about unpaid debt, and we’re here to help.

Remember, you’re not alone. There are many ways to handle debt, and we’ll guide you through them. Let’s start our journey into the world of debt consolidation loans for bad credit.”

How can I consolidate my debt with bad credit?

There are still ways to consolidate debts with a bad credit score. Bad credit debt consolidation loans are advertised widely online for people with a less than satisfactory credit rating.

However, these bad credit debt consolidation loans typically have a higher APR representative rate. Or you may still be able to get a debt consolidation loan tailored to people without bad credit, but the rate you are offered can be much higher. 

You’ll need to calculate if debt consolidation is still worth it if you have bad credit and can only get personal loans with high interest. 

If you are worried about your credit history stopping you from getting loans, you could try and improve your credit score first.

You should look for mistakes on your credit file and have them removed. Or register on the electoral register for a slight credit score boost. 

Another option is to consider a DMP instead, which I explain in detail towards the end of this guide. 

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How to get an unsecured consolidation loan for bad credit

The way to get an unsecured consolidation with bad credit is the same way as you would go about getting any loan with good credit.

You need to search your options and apply truthfully. Most applications are completed online quite easily, but you may be able to apply at a branch if you’re using a high-street bank. 

The only difference is when you have bad credit, you should be looking for loans specifically available to you.

Later in this guide, we will provide some examples of unsecured loans for bad credit. 

How to find a debt consolidation loan without collateral

To find an unsecured debt consolidation loan and not have to risk any of your assets, you should search the major banks and lenders.

People with a poor credit rating may want to search for online lenders as well. Most debt consolidation options for people with poor credit reports are typically offered by online loan providers and less so by high-street banks. 

Unsecured debt consolidation loans for bad credit

You can find unsecured debt consolidation loans for bad credit by searching online. There are even websites that allow you to compare your options.

You can also use a credit broker if preferred, though this may come with an additional cost. 

Below, you can find examples of unsecured consolidation loans for bad credit. These are in no particular order and are here as examples only. There may be a better option not listed here. 

1. Pegasus

Pegasus offers bad credit loans between £2,000 and £15,000. Their representative rate is 14.9%, but you can complete a short survey to get a personalised quote.

Pegasus has some exceptional online reviews and claims to put the money into your bank account within just one hour of approval. They are a good option to consider if you need to consolidate between the loan amounts available with bad credit. 

2. Everyday Loans

Everyday Loans is an online lender. You may have heard about them before because they do have some TV ads at the time of writing.

They market a generic personal loan that can be used to consolidate debts for people with bad credit. The representative rate advertised is 99.9% APR. They also have some decent online reviews with a good TrustPilot overall score.

3. Finio Loans

Finio Loans (formerly Likely Loans) offer unsecured consolidation loans for bad credit between £500 and £5,000. These loans must be repaid in a maximum period of three years. Their representative rate is 39.9% APR, subject to change. 

4. Solution Loans

Solution Loans have different products for people needing short-term and long-term credit. They have short-term loans for balances up to £2,000 and longer-term loans up to £25,000. They are also marketed for people with bad credit, claiming to help those who would be rejected elsewhere. Their representative APR is 14.3% (variable).

5. Koyo Loans

Koyo (now managed by Caquest.co.uk) offers loans that can be used to consolidate debts between £1,500 and £7,500 with a representative rate of 26.9%. These loans are unsecured and must be repaid within a maximum period of five years. 

6. 118118 Money

118 118 began a personal loans business in 2013 and also offers these loans for people with an unsatisfactory credit history. Their loans are available between £1,000 and £5,000 to be repaid between one and three years. The representative rate at the time of writing is 34.0% APR. 

Will my bank give me a debt consolidation loan with bad credit?

Your bank will assess you for unsecured credit in the same way they would assess someone who does not bank with them.

As a responsible lender, their decision will be based on your monthly income and credit history – not if you currently bank with them. 

There is no way of saying if your credit record will stop your bank from approving the loan because the FCA allows each institution to complete its own assessments while following guidelines. 

One advantage of using your own bank is that the funds may be deposited into your account quicker if approved. Because you already have your bank account with them, they can generally give you the money faster. 

Consider a debt consolidation guarantor loan

If your credit history is hindering you from getting an unsecured debt consolidation loan, there is another type of loan you may be able to get. Consider a guarantor personal loan.

These loans require someone with a good credit score to vouch for your repayments, meaning this other individual will be responsible for repaying if you don’t make repayments in full. 

The guarantor will need to be someone who trusts you to make repayments on time and repay the full loan amount. It is usually a family member or partner. 

An example of a provider of these loans is Guarantor My Loan. Better options may be available. It’s important to search the market for the most advantageous lender. 

A bad credit debt consolidation loan alternative

An alternative to consolidation that is a lot like consolidating debts is a Debt Management Plan (DMP).

A DMP is when you agree with a group of your creditors to make a single monthly payment, and then that payment is divided between them based on how much you owe each of them. 

In a simplified example, instead of making five payments of £50 each month, you can try to negotiate to make one payment of £250, which is split between all five.

This doesn’t necessarily consolidate debts, but it does allow you to benefit from single monthly payments. However, most people try to negotiate lower payments or repayments without any interest added. 

This alternative is useful for people with a poor credit rating because they do not have to apply for a new loan. You can somewhat consolidate by asking creditors to agree rather than having to go through an application process. 

Debt consolidations loans for all purposes

• Stuck paying high interest on credit card debts & loans?
• Looking for a better interest rate?
• Stuck with the confusion of multiple repayment plans?

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What debts can I resolve with a consolidation loan?

An unsecured personal loan to consolidate debt can be used to pay off store cards, credit cards and other personal loans.

Note that a balance transfer credit card can only be used to resolve other credit card debts. 

How much can I borrow?

Each lender will offer personal loans up to different amounts and repayable over different periods of time.

Even with poor credit, you can still find loans of up to £25,000 to be repaid over five years. 

Is a consolidation loan right for me?

Consolidating debts has helped plenty of debtors to pay off lenders and make managing their finances easier. It’s also saved money on repayments. 

But this doesn’t mean it’s guaranteed to be the best option for you. There could be a better method and a more efficient debt solution that fits your situation.

Only consolidate your debt if:

• You will save money even after the fees and charges of the loan have been paid
• You can afford to keep up payments until the loan is repaid

To discover what debt solution best fits your financial situation, I suggest you speak with a UK debt charity.

Charity advisors from National Debtline or StepChange will provide tailored advice and support. With their free help, you could avoid any mistakes and get out of debt with a more advantageous method. 

For example, a Debt Relief Order could help non-homeowners write off some of their debt in just one year.