Being in debt it is not fun. It feels like an endless hole that is impossible to climb out of. But, it’s important to remember that there are ways out of debt, it just takes a solid plan and commitment.
One of the best ways to get out of debt is by using a debt consolidation loan.
While we all wish we could go back in time and reverse the situation that got us here, or to just ignore it and hope it goes away, it is better to face it head-on.
That’s the thing about debt, it usually carries interest and the longer you put it off the worse it gets. Luckily, there are things out there that can help you pay off your debt.
The Money Advice Bureau was set up to provide free support to individuals that are in debt and struggling to pay it off.
There are numerous websites and blogs that detail strategies for how to save and pay off your debt quicker.
Millions of people have taken this tool and used it to turn their life around.
What is a debt consolidation loan?
Essentially, these loans allow you to borrow the money needed to pay off all of your individual debts and then merges that money you owe into one loan. You would then only have one monthly payment to one lender. For example, if you had credit card debt on multiple cards, you could consolidate this and pay a monthly fee to one lender as opposed to many.
Can I get an unsecured consolidation loan?
Consolidation loans are usually only available to homeowners as the home is used as collateral if they stop paying back the loan. However, unsecured consolidation loans do exist and you don’t need to be a home-owner to be accepted, but the amount you can borrow will be limited.
How to decide which consolidation loan is right for you
Once you’ve decided that getting a debt consolidation loan is right for you and your situation, you then need to select a loan and lender. This needs to be a well thought out process to ensure the one you pick meets your needs and is suitable for the amount of debt you have.
- Work out how much the loan needs to be: This isn’t the fun part and is often the thing people have been avoiding, but, it is a great first step to take control of your situation. Go through all of your debt and add it up to figure out how much you need to borrow. Make sure you include any fees that come with paying off these loans.
- How long will you need?: Consider your income and then figure out how long you will need to pay back the loan. If you want to keep the monthly payments low then that means it will take longer to pay off and you will end up paying more interest.
- Interest Rate: When scrolling through the different debt consolidation loan options, focus on the interest rate they offer. You want to find the lowest interest rate from the most reputable lender.
Top 5 Consolidation Loans
Now we understand what a debt consolidation loan is, how to get started, and what to look for, let’s look at the top 5 loans available.
It’s important to understand that these loans are not a one size fits all, and may not be the best for you or might not even accept you based on your circumstances.
TSB Personal Loan
TSB is a well-respected high street bank that has a good reputation when it comes to debt consolidation loans.
- Loan amount: £1,000 – £25,000
- Representative APR: 2.8% APR
- Loan term: 1 – 5 years
Post Office Personal Loan
Many people may not realise that the Post Office is actually also a bank and has been for some time. Aside from offering all types of insurance, they are a well respected high street bank.
- Loan amount: £1,000 – £25,000
- Representative APR: 3% APR
- Loan term: 1 – 7 years
Freedom Finance Personal Loan
Freedom finance has good reviews, but it offers a higher interest rate than both TSB and the Post Office.
- Loan amount: £1,000 – £25,000
- Representative APR: 6.8% APR
- Loan term: 2 – 7 years
Monevo Personal Loan
Again, Monevo is an online broker that offers an even higher APR than Freedom Finance but is able to loan more money which could be necessary for some people.
- Loan amount: £1,000 – £35,000
- Representative APR: 10.6% APR
- Loan term: 1 – 5 years
Accepted Personal Loan
With by far the highest APR of any of the top 5, Accepty should only be your choice if you have not been accepted with the others.
- Loan amount: £1,000 – £25,000
- Representative APR: 18.4% APR
- Loan term: 1 – 5 years
If you have decided that a debt consolidation loan is the best option to help you free yourself from debt, then there you have the top 5 loans. Be sure to do your research and apply to each one, as everyone’s circumstance is different and the numbers stated above may change depending on your situation. Being in debt is not a fun situation to be in, but you have made the first step in the right direction and all you need now is a good loan and some motivation to get yourself out of debt.
