Debt consolidation guarantor loans
Finances are complicated at the best of times but when you’re juggling multiple credit card repayments, or if you’re stuck in a payday loan cycle, it can feel impossible to keep on top of everything. Missing repayments on loans can lead to penalties and negatively impact your credit rating, leading to a worse financial situation. Here’s where a guarantor loan for debt consolidation from UK Credit can help.
What is a debt consolidation loan?
Put simply, a debt consolidation loan is used to settle any outstanding debts. Instead of managing lots of different repayments, you’ll have just one monthly amount that you need to pay back. This can decrease your overall monthly repayments and the interest you’re paying, freeing up the money you need to pay off existing debts.
Typically, you would look to take out a debt consolidation loan if you have built up debt on multiple credit cards or high interest payments accrued through payday loans. Consolidating unsecured loans into a secured loan is not always possible or the best option – as this would mean that your property can be repossessed should you fail to meet the repayments. Importantly, UK Credit guarantor loans are unsecured, as you have the protection of a guarantor who can step in to make the repayments if, in the unlikely circumstance, you no longer can.
Benefits of a UK Credit guarantor loan for debt consolidation:
- Consolidate existing debt into one monthly payment
- Quick and easy to apply
- Extended terms leading to lower repayments
- Lower interest rates
- Escape the payday loan and credit card cycle
- Unsecured – your home is not at risk
What impact will it have on my credit rating?
Your credit score is determined by several factors including your repayment history, application searches, your debt, and how much credit you have available to you.
By paying off loans and ensuring you make your repayments on time every month, your credit rating will begin to improve.
When might debt consolidation be the right choice?
- If you are making multiple repayments every month because you owe money on credit cards, store cards, finance deals or payday loans
- If you are struggling to manage your debt and make minimum payments
- If you need to decrease your monthly outgoings
- If the debt consolidation loan amount covers the full amount that you owe to all creditors
- If you are likely to take out short term loans in the future or build up your credit card debt again, debt consolidation isn’t a sensible option. You could find yourself in a far worse financial situation than you started with.
Getting the right guarantor loan for debt consolidation
- How much do you need to borrow?
Add up your debt and any charges you need to pay off. Make sure you borrow enough to pay off all your creditors, or you might still end up with multiple repayments each month.
- How quickly can you pay off the loan?
Your monthly repayments will be less if you borrow for a longer term, but the quicker you can pay off the loan, the less you’ll end up paying overall. It’s about finding the right balance to make the payments manageable and minimise how much you’ll end up repaying.
Our guarantor loan calculator is a great way of testing out the different loan terms to see what your monthly repayment would be and how much you’d need to pay back overall.
How to apply
- Find a guarantor
Once you’ve worked out how much you need to borrow and how quickly you can afford to repay it, you’ll need a guarantor with a good credit rating who is willing to co-sign the agreement. Check whether they’re renting or if they own their home as you’ll need this information before you apply.
- Apply direct with UK Credit
We keep our process as simple as we can but we need to make sure you and your guarantor are suitable for a guarantor loan so there are affordability checks we need to carry out. We don’t want our customers to end up in financial difficulty and only approve loans if we are confident that the repayments are affordable for both the applicant and guarantor.
- Receive your funds
Once approved, we pay the funds to your guarantor who will transfer them to you. You can use the money for whatever you need it for, whether it’s your dream wedding or to fix that leaky roof.