Debt Consolidation Loans

A debt consolidation loan can be used to pay off various forms of debt, such as:

• Credit card debt
  Most credit cards have high APRs, making them an expensive way to borrow money for extended periods of time
  
  
• Personal loan debt
  Unsecured loans are frequently used to finance a car purchase, house improvements, or a holiday
  
  
• Overdraft
  Most banks charge high interest rates on overdrafts, which can quickly add up
  
  
• Store card
  Even though some store cards provide upfront discounts on purchases, they frequently have hefty APRs and fees

A debt consolidation loan allows you to consolidate your previous debts into a single loan, requiring you to make only one monthly payment. This is how it works:

• Work out what you owe
  Examine your current credit card, loan, and overdraft debts. Calculate the total loan amount required to cover these existing debts and borrow that amount
  
  
• Pay off existing debt with the loan
  Use the loan to pay off existing debt. Having only one loan decreases the number of monthly payments you must make by consolidating your debt
  
  
• Make your monthly repayment
  After you've paid off your existing debts, you'll repay the consolidation loan within the specified time frame. It may be easier to manage if you only have one monthly payment

Your financial position will determine whether a debt consolidation loan is the best option for you. Here are some advantages and disadvantages of debt consolidation loans to help you make the best decision:

Pros:

• Lower your monthly costs.
  This is especially useful if you have a large number of outstanding bills that are generating interest.
  
  
• Reduced overall interest
  APRs on debt consolidation loans are typically lower than those on payday loans or some credit cards.
  
  
• Easier to manage
  Managing one payment per month is easier than managing several at once.
  
  
• Improve your credit score
  It's quicker to make a single monthly payment, and doing so can help your credit score.

Cons:

• Missed payments have consequences
  If you do not make your monthly payments in full, your credit score will be affected.
  
  
• Set up fees
  Your existing creditors may charge you a fee for transferring or paying off your balance in full. Always read your T&Cs before making a decision.
  
  
• Other options are available
  A 0% balance transfer credit card, for example, may be appropriate for someone with smaller debts however, these offers come with strict conditions and timeframes meaning it could end up costing more in the long run.

Every lender has their own set of criteria for choosing whether to grant a loan, but most will request the same information. For an online loan application, you'll need your employment information, including annual income, banking information, and a five-year address history.

Borrowers must also be 21 or older to qualify for Novuna Personal Finance. You must have a bank or building society account, a strong credit history, be a permanent UK resident, and be employed full-time or retired with a pension.

If you’re unable to repay your loan, we’re here to help. It’s important that you contact our Collections Team on 0344 375 5488. Once we understand your current circumstances, we’ll be able to advise the most suitable option or establish a payment arrangement that is affordable for you. We may ask for information about your financial situation to ensure we put the most suitable arrangement in place.

If you’re experiencing financial difficulties, we may signpost you to a free debt charity called Step Change, who will be able to offer you confidential support.