Debt Consolidation Loan
admin March 28, 2022

Do you have multiple loans in arrears?

Do you pay repayments separately on each loan?

What if you could mere all your pending dues into a single monthly payment?  

That’s how debt consolidation works.

For example:

If you have car loans on bad credit online, home renovation loans, student loans and pay repayments separately. You can combine these loans and repay the amount at relatively low APR and interest rates.

Debt consolidation is the best way to streamline the entire debts into one loan payment. Here, you pay the complete amount to a single lender.

Reduce Stress and Interest on Debt with Debt Consolidation Loans

A Debt consolidation loan is the best way to refinance all your loans into a single affordable payment. The interest rate on debt consolidation is low. It does not require contacting and dealing with several lenders with multiple loan repayments.

You pay the consolidated amount to the single lender. It takes the hassle off the table and ensures peace. But securing a debt consolidation loan with bad credit from a direct lender might be challenging. Borrowers here can use personal loans for debt consolidation.

For debt consolidation loans, borrowers can get 0% APR on using a balance transfer credit card. Identify the balance while opening and transferring the balance to the card.

Similarly, getting a debt consolidation loan for bad credit UK no guarantor is challenging.

The criteria for the same differ from lender to lender.

Is It a Good Time to Get a Debt Consolidation Loan?

A debt consolidation loan is not the ultimate resort. It may not work in most situations. Choose debt consolidation loans only in the situations below:

  • You have multiple high-interest loans
  • Lacking on making regular payments on loans
  • Wish to reduce the interest rates
  • Tired of making repayments separately
  • Missing repayment deadlines

If you can relate to these situations, you can consider consolidating your debts. Debt consolidation is easy with a good credit score. You can obtain a debt consolidation loan with bad credit from a direct lender. Here is how you can!  

How To Qualify for A Debt Consolidation Loan with Bad Credit?

To qualify easily for a debt consolidation loan, one needs a credit score of 650 or above. One having a credit score lower than 650 can get a debt consolidation loan with secured loans.

Yes, it may be a risky and pricier affair as compared to consolidating loans with good credit.

In secured loans, one needs to stake his belongings or assets to qualify for the loan.

You can stake anything - car, home, gold, other properties, etc. The borrower can lose the asset to a creditor if one defaults on the debt consolidation loan. It can further affect taking car loans on bad credit online.

If you want to merge all your debts on bad credit, here is what you can do!

1) Identify your credit score

Analyze your credit report. Look for the delinquencies in the report. Can you get rid of some of these delinquencies? If yes, you can secure a debt consolidation loan easily. Check whether you can get a debt consolidation loan with this credit score? If yes, what is the possibility of getting approval on the same? Analyzing these will help you get a clear idea.

2) Explore the lenders

Not every lender readily agrees to consolidate debt on bad credit. The major reason for this is- the loan is risky for the creditor. Hence, look for lenders providing debt consolidation for bad credit.  

While doing so, pre-qualify for the loan. Seeking pre-qualification from different lenders will help you know everything about the loan norms. Well, debt consolidation loans have a high-interest rate, and thus the credit check is hard.

Identify the right lenders for your circumstances. Think twice before considering debt consolidation. Although it relieves one of the excessive liabilities, you pay more interest.

3) Explore credit unions

Credit unions work like banks. The difference here is credit unions assist regardless of credit score. Banks may have limitations on granting debt consolidation loans on poor credit.

Apart from this, seeking and qualifying for a loan with credit unions affects credit scores the least. Credit unions are the best choice when a borrower cannot secure a loan through the traditional procedure. Instead of seeking a debt consolidation loan with bad credit direct lender, you can consider this option. 

4) Release equity from your home

Equity is a legal right you share in your property. If you hold 100% equity in your home, you can qualify for debt consolidation staking a part. If the property's value is bound to increase in the coming years, it is good.

You are less likely to lose the property to the creditor.

 It increases the chances of debt consolidation bad credit loan approval. You can choose to refinance to a new mortgage if the value of the property increases. With a mortgage, you borrow for a longer time.

It might increase your repayments. Paying off a debt by selling equity is a good way to get debt-free. Avoid falling into negative equity. If the price of the house falls, it can prove troublesome for you.

These are some ways to help you get a debt consolidation loan on bad credit direct lender. 

Can A Guarantor Make Debt Consolidation Loan Approval Easier?      

It is a way to get the loan sanctioned if a guarantor is there to back you.

For example, if you struggle to get a loan with bad credit, a guarantor can help. A guarantor guarantees the loan alongside the borrower with his promising credit score.

Creditors determine the total amount one can borrow after analyzing the credit scores of both the borrower and the guarantor.

Having a guarantor on a loan can save the borrower from the risk involved.

Failure to repay the loan can negatively affect the credit score, especially of the guarantor.

Things to tell a guarantor before securing his consent on the loan

Thus, before choosing someone as your guarantor and proceeding with the loan, keep the guarantor in the loop about:

  • The amount you need to borrow
  • The reason for taking out the debt consolidation loan
  • Total high-interest rate liabilities you owe
  • The source of making repayments on the loan
  • The timeline you need to pay back the loan in full
  • The risks involved in the loan
  • Ask whether the guarantor is fine with repaying the pending amount of the loan if you default.

Not everyone agrees to be a guarantor for a loan. If someone does, it is your responsibility to ensure transparency.

How probable is getting a debt consolidation loan with bad credit and no guarantor?

To talk realistically, no creditor provides debt consolidation loans with bad credit and no guarantor. It is because the creditor shares all the risk of losing money.

Here is the difference between securing a debt consolidation loan with bad credit and no guarantor and with a guarantor.

Guarantor on the debt consolidation loan with bad creditDebt consolidation loan with bad credit and no guarantor
  Increased chances of securing loan approval assisted by a good credit score  Too unrealistic to secure approval if borrowing with poor credit and no guarantor
Do not need to stress over a few missed repaymentsYou are solely responsible for making repayments.
This loan agreement could affect your relationship with the guarantorNo such fears
A guarantor is someone close, and you can trust.There is no need of depending others while securing the loan.
It is less risky than having no guarantor  It is risky

So, while considering debt consolidation on bad credit in the UK, it is ideal for analysing every aspect of the loan. Every loan has its positives and negatives. Thus, you can try the above ideas to get a debt consolidation loan on bad credit in the UK. If these don’t work, consider an expert’s consultation.