Debt consolidation loan rates

29 May2009

A debt consolidation loan is one way of simplifying your finances and reducing your outgoings each month. However, because of the way debt consolidation works, you may sometimes end up paying more in the long term.

The interest rate you are offered on your debt consolidation loan will affect the overall cost of repaying your debt - so here, we take a look at what can affect the interest rate you`re offered.

Quick guide to debt consolidation

A debt consolidation loan is a new loan that pays off your existing debts, effectively combining multiple debts into one affordable monthly payment.

Many people who take out a debt consolidation loan are also looking to reduce their monthly outgoings by spreading out their repayments. This can make your debts much more manageable on a month-to-month basis, but be aware that because you will also be paying interest for longer, you`ll end up paying more than if you had chosen a shorter repayment term.

However, you could still save money overall if you are consolidating high-interest debts such as credit cards.

What kind of interest rate can I expect on my loan?

This will depend on a number of factors, including your credit history and your current circumstances.

On the one hand, the fact that you are looking for a debt consolidation loan does not mean you will have a bad credit history. Providing you have stayed on top of your debt repayments and other financial commitments in the past, you should have a strong credit history - you have the experience of borrowing money, and the proof that you can manage it well. In this case, you could well be offered a relatively low interest rate on your debt consolidation loan.

On the other hand, if you have struggled in the past - if you`ve missed some of your debt repayments, perhaps - then your lender may offer you a loan with a higher interest rate. This can make a big difference to the amount you pay each month and/or in total.

Try our debt solution finder

Answer a few simple questions and find out which debt solutions could help you, based on your circumstances.

Your Situation

Your Details

Please remember, this is just an information tool. We would always recommend you speak to a debt advisor for the most appropriate way to resolve your debt problems.
We'll give you an on-screen recommendation and call you. One of our advisors will be in touch to answer any questions you may have about your results.
Your privacy is important to us. All correspondence is held in the strictest confidence and we will only request information required to find your debt solution.

Related resources:

Tags: debt, debt consolidation, loans, loan, rates, debt consolidation loan rates, debt consolidation loans rates, debt consolidation loan interest rates, interest rates, rate

Fees payable when continuing service is provided. Repaying debt over a longer period may increase the total amount to be repaid. Calls are recorded and are usually free from UK landlines. Mobile phone users may be charged and should check with their service provider. Cards are provided by third parties and are subject to eligibility, status and terms and conditions. Applicants must be UK residents aged 18 or over.

All About Money Limited © 2013. All rights reserved. 42 Boston Rd, Sleaford, Lincolnshire NG34 7ER.