What You Need to Know About Debt Consolidation Loans UK

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What You Need to Know About Debt Consolidation Loans UK

By: John Mussi

Should you find yourself over your head in debt, you might want to start looking into debt consolidation loans UK . These loans are designed for the person who needs help in taking care of their outstanding debt, keeping them from bankruptcy.

Much like conventional secured loans, debt consolidation loans UK are more or less marketed toward those with credit problems... enabling them to consolidate a portion (if not all) of their debts into a single lower monthly payment.

Debt consolidation loans UK tend to have a few advantages over conventional loans... they're usually easier for people with poor credit to get, they sometimes offer better rates than other loans that the person could apply for, and some debtors will even offer lower repayment rates to people who are consolidating their debt.

How debt consolidation loans UK work

Since debt consolidation loans UK are still loans, they need to be applied for at a bank or other lender. Some companies specialize in this type of loan almost exclusively, whereas others deal in these loans as well as more conventional home or auto loans. In most cases, you need to be able to show the various debts that you hold as well as statements of income, a stable residence, and collateral.

Once you've been approved for your loan, the actual consolidation can occur in several different ways. In some cases, the lender will process the payments for you (as is the case with some companies that specialize in debt consolidation loans UK .) In other cases, you'll be issued either a check or a line of credit and are responsible for making the debt payments yourself.

Either way, the money that you borrow is used to pay off some or all of your debt and instead of paying your outstanding debts you simply pay the money to repay the loan.

Debt consolidation loans UK are often secured loans

In most cases, debt consolidation loans UK are secured loans, meaning that they have some sort of collateral required as a security for the loan. Automobiles and real estate are most often used as collateral, though depending upon the lender precious metals or other valuables can sometimes be used.

Regardless of the collateral used, its purpose is to insure that the loan will be repaid... after all, if you don't repay the money that was lent to you, then the lender is able to take possession of your collateral and sell it in order to recover their lost money (often for considerably less than the value of the collateral.)

Keep in mind, however, that pretty much all lenders who offer debt consolidation loans UK would much rather you simply repay the loan than have to sell off your collateral.

After all, they get off a lot cheaper and with a lot less time involved if they don't have to hire someone to take possession, then find a seller, and process the sale... because of this, many lenders are willing to work with you to help you catch up should you fall behind on your payments.


You may freely reprint this article provided the following author's biography (including the live URL link) remains intact:

About The Author

John Mussi is the founder of Direct Online Loans who help homeowners find the best available loans via the www.directonlineloans.co.uk website.


amazing planet 07.02.2008. 23:42

Is this the way that a debt consolidation company works? They reduce the amount? What is a good debt consolidation company that will negotiate what you owe by negotiating with the creditor, and then you owe less than before to each creditor, but you owe them for one big new loan , to them for paying your debts?
So they are getting your debts down by negotiating and then give you a consolidation loan to cover the amount owed to them now?

amazing planet

Admin 07.02.2008. 23:42

go to www.payplan.co.uk
or citizens advice
i would never pay a company to negotiate my debts. if a company is doing this for you there will be a charge (thats why its registered as a company rather than a charity) for the service nothing ever comes for free.


Joe 03.02.2012. 11:47

Which is will be the best P2P Lending Platform to get debt consolidation loan? I have old debts and now i need to repay it.


Admin 03.02.2012. 11:47

Hey there!
Well it is essential that you pay your debts as soon as possible. However, if you are looking for debt consolidation loans through P2P lending sites, it is essential that you check your credit grades and improve them before adding your loan request online, as the lenders available online are keen to develop greater trust on the borrower, by checking your credit profile.

Also, you did not mention your country. Because, P2P lending services are provided by different websites in different countries. If you belong to US choose Prosper. UK has more options for you. Zopa, YES-secure.com etc. sound interesting and you can take a chance by posting your borrowing request here.

Hope this answer helps you clear your bad debts! :)


Sabeebee Barks 18.08.2011. 17:50

What is a good debt consolidation company in the UK? I intend to consolidate my debt. Its not a very big amount. I would rather consolidate it, than spend any more time doing my finances. Would rather have one fixed monthly payment. Does anyone know a good company in England, that is honest and not out to trick or scam me out of interest! Please, people who have actually been in a similar situation before and not people who find any old company on google! I have been advised to find an independent company and not commercial. Help!!!

Sabeebee Barks

Admin 18.08.2011. 17:50

Start with your bank - many banks have loans available for situations like yours


tonna_lynn_76 15.07.2009. 13:07

How long do we have to wait to take out a 2nd mortgage? We are wanting to do debt consolidation. We just made our first house payment. It was a Fannie Mae foreclosure which we purchased thru a loan with the USDA. We paid $58,000 the house appraises for $72,500. How long do we have to wait to get a 2nd mortgage and how much could we get? Any help would be great ...thanks


Admin 15.07.2009. 13:07

For some reason your Question has appeared on the UK site -

In UK, the answer is 'no time at all' = I know someone who got 2 Mortgages - one for the main loan and the second for a 'top up' - at the same time ..

However, in USA the rules may well differ .. I guess you are going to have to post again..


dididave 15.09.2007. 09:24

How long is a debt outstanding in the uk? Meaning how many years do they have to collect on a debt before it is legally considered defunct.


Admin 15.09.2007. 09:24

You must always be careful with credit cards, car loans, mortgages and debt consolidation. Persoanlly, I was in debt of over $100,000 at one point in time, roughly 4 years ago. I am proud to say I am now DEBT FREE. It is very confusing on what to pay first how to chop down your debt, but there is a lot of good content out there to help. I have also started my own blog to help people out by talking about what I think is important. Check it out sometime!



Airic C 02.10.2006. 12:24

Does anyone know the difference between Debt Settlement Companies and CCCs Companies? Which is better? I have some credit card debt and I don't know what credit card company to consider, either a "CCCS" or Debt Settlement company. Is there a better alternitive to either?

Airic C

Admin 02.10.2006. 12:24

i personaly work for the credit card collections department of a large UK based bank, and am faced with people in financial trouble everyday. rather than constantly harrass our customers we are trained to recomend debt management companies to card holders who are in financial trouble. consolidation loans like you would see on the televisoin, basically loan you the ammount you would need to pay off all your card debts, and then you pay them back over a period of time, many people find this easier because its only one bill to pay every month, rather than 1-10 credit card bills each going out on different days, however the interest on these cards is usualy higher than the cards interest, and as such costs more in the long run, they attract people by offering low monthly re-payments, however this just allows them to drag out the loan even longer, earning them even more money. as a collections specialist i never recomend consolidation loans

now for debt management compaines, these companies are a little different, they will usualy produce a financial assesment for yourself (the card holder) also known as an income and expenditure report. they will then decide how much you can pay to each creditor each month, they send the details to all your creditors and then if your offer is accepted you usualy get the interest and charges frozen on your credit card, and are allowed to pay back a lower ammount than usual for a fixed period of time.
one thing i will say is read your contract through very closely, as some debt management companies (such as gregory pennington ) actually wait 3 months before paying any of your creditors, even though you will be paying them money every month to sent to the creditors (and to pay for thier service) this pushes you further into arrears, and has caused some people to be issued default notices, the company do this to both earn interest on the money in thier holding accounts, but also to pro;long the ammount of time you will need thier services. in my job i only ever recomend FREE debt management compaines such as payplan, the CCCS (consumer credit counceling service) and your local CAB (citizens advice bureau) all of these comapines provide equal or better service than those you would pay for. hope this helps you out.


CAROL DOMINO 24.10.2006. 20:04

Are there any genuine loan companies for tenants in the UK? I am seeking a 15,000 consolidation loan over five years. Is there a company out there which does business on this basis with tenants?


Admin 24.10.2006. 20:04

Please can you contact Citizens Advice, they may ask the company(ies) to spread your payments out over a longer period rather than you getting further into debt. There by you would be making longer payments but of a lower amount.
Also just remember these company(ies) you owe to can not take you outside and shoot you!
They can not repossess your home. All they can do is threaten to take you to court but they wont as, they know if they do make you bankrupt then they will never get a Penny from you.
I owe over 40,000 and I only pay 15.00 per month. I have told them that is all I am giving them and if they want anymore they can see me in court.
Because I am making some sort of payment a judge will not order me to pay any more.
If the people you owe wont stop ringing you change your phone number.


Orbinc O 27.11.2008. 20:31

What is a reasonable offer (%) to pay back a 10 year old student loan? I have slowly been paying off my very old student loan, if I offered to pay back 50% in one payment to clear the debt do you think this would be acceptable? what is an acceptable amount (the loan is at 2200). I know other companies accept less than the original debt because they have accepted my offers in the past.

Orbinc O

Admin 27.11.2008. 20:31

You should check the rules governing student loans in the UK, whether settlement is an option. You may also try to see if you can get a lower interest rate on your loan (in the US they call it "consolidation") so you have a lower interest rate and you pay faster. If settlement is an option in the UK, then you should contact the company and see if they accept your offer, but then they would likely request immediate payment.

Here is a web site for your UK government loans (courses after 1998)

and courses before 1998 (since your loan is 10 years old this may be more applicable)

Good luck!


Aaron 05.12.2010. 16:20

Is it possible to get a loan with no collateral and no deposit? I appreciate that this question will attract alot of scammers but is there a genuine solution? I have a few different credit cards that I am being charged a stupid amount of interest on. I have also missed a few payments which has had a bad effect on my credit rating meaning that I can't get another credit card and transfer the balance to a card with a lower interest rate. Has anyone else been in this predicament?


Admin 05.12.2010. 16:20

As you have discovered, once you start to have problems making payments, new lenders either turn you down or want an even HIGHER rate of interest that the current ones ...

The ONLY way to get a lower rate loan is to put up some security - and about the only thing worth enough is your house ... but moving unsecured card debt into a so called 'consolidation' loan secured on your house may be good news for the lender but not you (if you then default, they will get your house)

All I can suggest is going to Citizens Advise / UK Gov debt help lines, and try to face the fact that taking on more debt will just make things even worse .. your solution is an IVA (if you are employed & are still paying your Mortgage, there is some hope you can pay down the debt and hold onto the house) or bankruptcy (if you have no house to loose).


S A 12.04.2008. 12:00

I need to take unsecured loan in UK how much i can borrow? Can i take couple loans from different companies?


Admin 12.04.2008. 12:00

Undoubtedly, it can be said that these days in the UK more and more borrowers are availing loans to meet their financial needs. But, most of the time, it is seen that borrowers in the UK wants to avail loans at a low rate. In this article, we will discuss that how one can get the advantage of low rate loans UK.

In the UK, in order to get loans at a low rate, a borrower needs to make some research. Various banks, lending companies, financial organizations offer loans. Meet all those lenders personally, ask for their loan quotes and compare them properly. It will enable you in finding low rate loans. Incase, if you do not have that much time, you can accomplish all these things over the Internet as well.

The role of collateral and equity is unavoidable to increase the possibility of low rate loans UK. Undoubtedly, it can be said that the interest rate of secured loans is relatively low than unsecured loans. Besides, some factors like, permanent employment, good employment record, good credit score, reducing loan term etc work positively to make the loan rate low.

Mortgage is the best alternative, with which borrowers can avail a higher amount at a lower rate. Oppositely, if the purpose of loan is related to education, student loans can be chosen as low rate loans.

In this context, the significance of debt consolidation loans is unavoidable as well. The borrowers, having numerous debts, generally spend a bulk amount to pay off their debts. By opting for debt consolidation loans, they can also enjoy the facility of low rate loans.

And last but not the least; the idea of low rate loans is variable. Based on borrowers? economical conditions, it changes. Various websites are available over the internet, where borrowers will get abundant information about low rate loans UK.

In the UK, personal loans give chance to all sorts of borrowers for meeting their personal desires. Whether you are a homeowner or tenant, it won?t be an issue for availing personal loans UK, as these loans are available both in secured as well as unsecured forms. For opting for the secured option, you need to pledge something as a security. Any valuable object you can use as security. It could be your home, real estate, automobile, saving account and so on. Whereas, unsecured option is appropriate for tenant, as it does not demand anything against the loan amount.

With the secured option, a borrower in the UK can borrow the amount ranging from ?5,000 to ?75,000 for 5-25 years. On the other hand, unsecured option offers borrower the any sum from ?5,000 to ?25,000 for 5-10years.

The interest rate of personal loans in the UK also varies. Since, secured option claims a security against the lending amount; hence, the interest rate of these loans is a bit lower. Unsecured option can also be availed at a better rate, for that a bit search is necessitated. In such cases, borrowers? good credit score also play a positive role.

With personal loans, a borrower in the UK can fulfill his all desires. These loans can be taken for various purposes. To name a few, we can talk about consolidating debts, buying car, pursuing higher study, making holiday trip and so on.


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