A personal loan for debt consolidation can be taken out to pay off debts such as credit cards, store cards and other personal loans rolling them into one manageable monthly payment.
Your debt doesn’t disappear – it will still have to be paid off. However, you may be able to reduce your monthly outgoings because:
- You’ll pay the same interest on all of your debt. Interest on credit and store cards can be high, a personal loan rate could be much lower.
- You may be able to spread the loan over a longer period. This may reduce your monthly payment, but by increasing the term you may pay more interest overall.
Consolidating debt is not the best solution for everyone, and the interest rate may sometimes be higher which could mean that you pay more back overall. However, if you can afford the repayments, you have stable finances and you can control your spending, this could be an option for you.
Remember, it’s important to consider all of your borrowing options carefully; we don't recommend that you borrow or increase your debts if you’re in financial difficulties. If you’re unsure what to do, seek independent advice.