The 7 Best Debt Consolidation Loans For Bad Credit In UK

Considering debt consolidation loans for bad credit in UK want to reduce the payments you have to make each month and get out of debt more quickly. However, not everyone will benefit from using this method of reducing their debt.

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And if you have poor credit, getting approved for a loan to consolidate your debts with a favorable rate of interest might be difficult.

It is essential to explore all of your available choices if you have poor credit and high-interest loans that you need to pay off. Loans for poor credit histories might help pay off some obligations, particularly those with exorbitantly high-interest rates, such as payday loans and title loans.

And even if you can’t be approved for a debt consolidation loan with an interest rate that’s low enough to make it worthwhile, there are other choices that could still assist you in paying off your debt over time.

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Key Takeaways

  • The 7 best debt consolidation loans for bad credit in the UK
  • Answers to most of the frequently asked questions
debt consolidation loans for bad credit in UK
Credit:bankrate.com

The 7 Best Debt Consolidation Loans For Bad Credit In The UK

Deb consolidation is known as the practice of reducing the number of creditors you owe money to and saving money simultaneously.

Others who are having trouble keeping up with their monthly payments and are dangerously close to falling into arrears and wish to save some money on their monthly installments are both candidates for this option. Some of the very finest debt consolidation loans available in the UK for those with poor credit: 

1.  Universal Credit

Through its partners, the online lending network Universal Credit provides unsecured personal loans ranging from $1,000 to $50,000. The repayment lengths vary from three to five years or 36 to 60 months.

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Even individuals with bad credit may now get personal loans thanks to Universal Credit; however, certain costs are involved. First, it has high APRs that are far more than the most affordable rates on our list.

Second, all personal loans from Universal Credit include origination fees ranging from 4.25% to 8%. It would help if you considered this when calculating your loan amount since it will be subtracted from your loan profits and prevent you from receiving the total amount after the fact.

A minimum credit score of 560 is needed for Universal Credit, making it accessible to various borrowers.

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Pros

  • Flexible standards for qualifications
  • Day-after financing
  • No early termination fee

Cons

  • Hefty APRs
  • The origination cost for all personal loans ranges from 4.25% to 8%.

2.  Upgrade

All states, except West Virginia, Vermont, and Iowa, provide accessible online and mobile credit and banking services via Upgrade. Over 10 million applicants have received credit totaling over $3 billion since the platform’s establishment in 2017, and it has continued to grow its web and mobile capabilities.

Although loan financing may take up to four working days, Upgrade offers loans to borrowers with bad credit histories. And probably most crucially, if you use a loan to combine your debts, Upgrade will pay your other creditors directly.

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The maximum interest rates are more than those charged by the other lenders on our list. But if you want to combine high-interest loans, Upgrade is still a versatile choice since loan amounts may be as little as $1,000 and as high as $35,000.

There are loan lengths of three and five years available. If paying off your combined debts as fast as possible is your objective, there is also no prepayment penalty, which allows you to save money. But remember that these advantages are offset by Upgrade’s origination cost, which ranges from 2.9% to 8% of the loan amount.

Pros

Cons

  • High range for APR
  • Levies penalties for late payments, inadequate cash, and origination
  • Provides only two loan payback terms

3.  FreedomPlus

Personal loans are available via the indirect lending platform FreedomPlus, which Cross River Bank or MetaBank backs. Due to its flexible loan periods (two to five years) and loan amounts ($7,500 to $40,000), the lender founded in 2014 is one of our top choices for debt consolidation loans.

These features simplify combining a significant debt balance while cutting monthly payments and spreading out payments over a protracted period.

FreedomPlus allows direct payment to creditors, much like our other top choices. Applicants are more likely to be approved for a loan if they direct pay 85% of the entire loan amount for debt relief.

However, depending on the interest rates on your existing debts, it can be more challenging to save money by combining due to the possibly high APR FreedomPlus charges. The origination charge, which ranges from 1.99% to 4.99% of the loan amount, may further raise the cost. Before utilizing FreedomPlus for debt consolidation, do the math.

Pros

  • Money is ready in 48 hours.
  • Flexible periods for repayment
  • Permits joint borrowers

Cons

  • Not all of the application is made online.
  • Imposes a need for a minimum income
  • The maximum loan amount is high

4. LendingClub

The biggest online marketplace for personal loans is LendingClub, a peer-to-peer lender. Since its creation in 2007, the platform has worked with over 3 million clients, financed more than $55 billion in loans, and offers loans in all states except Iowa.

Additionally, LendingClub will pay your creditors directly, so you don’t have to bother about the details of debt consolidation, even if it does not have the quickest financing time.

Additionally, candidates are eligible for loans ranging from $1,000 to $40,000, making it simpler to pay off bills even if they have significant sums. However, LendingClub’s APRs are higher than those of other lenders (peaking at 35.89%), and its range of loan periods is restricted to three or five years. As a result, LendingClub may not be the best choice for debt consolidation, mainly if you can find cheaper rates elsewhere.

When calculating how much you stand to save by consolidating loans, you must also take into account the origination fee, which ranges from 2% to 6% of the entire loan amount.

Pros

  • Will use the balance transfer loan to pay off third-party creditors immediately.
  • Co-applicants are accepted
  • For customers with average to outstanding credit

Cons

  • Late and origination fees
  • Limited availability of loan terms
  • High range for APR

5.  M&S Bank 

M&S Bank gives a typical APR of 4.90% on loans of this magnitude. Additionally, a loan period of up to 7 years may be obtained at a competitive rate, as opposed to the more common limit of 5 years.

Existing M&S clients (current accounts, loans, or cards) may be given more advantageous APRs, but there is no distinction for a loan of this amount.

You may borrow £10,000 for 60 months at a rate of £187.77 per month. The total sum that must be repaid is £11,266.20. Representative 4.90% APR, or 4.90% p.a., is the annual interest rate. Available credit is dependent on status.

At M&S Bank, overpayments are free; however, interest penalties apply if you intend to pay off the whole debt before the specified period.

Although your credit score may suffer, the lender does not incur late or missing payment penalties.

Pros

  • The rate is valid for periods of up to seven years.
  • There are no late fees.
  • Present and potential clients

Cons

  • An annual salary of £10,000.
  • Some APRs are only available to repeat customers.

6. Tesco Bank 

Tesco charges a fixed 5.10% representative APR for loans between £7,500 and $25,000. Although there are loan repayment options with lengths of up to 10 years, this highest rate is limited to 5 years.

You may borrow £10,000 for 60 months at £188.64 each month. The total sum that must be repaid is £11,318.40. Representative 5.10% APR, or 5.10% p.a., is the annual interest rate. Available credit is dependent on status.

Tesco will charge you a fee if you wish to repay the loan early, but routine and past overpayments are free.

Tesco Clubcard membership is not required, but it may put you in line for a higher rate, according to the lender’s website.

Pros

  • If qualified, payment cuts are offered at loan inception.
  • Tesco Clubcard could enhance an application

Cons

7.  MBNA

MBNA provides loans between £7,500 and £25,000 at a rate of 6.70%, while it may be better recognized for credit cards (representative). Additionally, if eligible, there is a payment vacation of up to two months per year.

You may borrow £10,000 for 60 months at a rate of £195.67 per month. The total sum that must be repaid is £11,740. Representative 43 6.70 percent annual percentage rate, or 6.70 percent p.a. Available credit depends on status.

Although the 6.70% rate is only applicable for a maximum of 5 years, borrowing is possible for lengths of up to 7 years.

While there are costs for making partial early repayments, there are none for making additional payments toward your amount.

It should be noted that only Lloyds Bank offers MBNA personal loans.

Pros

  • Money may be accessible in 24 hours.
  • Holidays from payments for up to two months in a row each year

Cons

  • Loan durations longer than 1 to 5 years at a higher indicative APR
  • Late payment fee of £25 (after 7 days)

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Conclusion

A debt consolidation loan enables the aggregation of many outstanding obligations into a single account. After consolidation, you will have one monthly payment to make to the new lender instead of your numerous previous loan and credit card installments.

Additionally, you may be able to save money and improve your credit score with a consolidation loan. Particularly with credit card debt, paying off revolving accounts with an installment loan might decrease your credit usage rate and, as a bonus, raise your credit score.

Online lenders could provide debt consolidation loans with fewer restrictions for credit scores. To compensate for the increased risk, debt consolidation loans for those with weak credit sometimes have higher interest rates and occasionally fees. Debt consolidation can not result in cost savings if the interest rate you are eligible for is too high.

Credit unions are another option to take into account if you wish to consolidate debt but have a low credit score. In contrast to commercial banks, credit unions are often more inclined to accept applicants with less-than-perfect credit; nonetheless, membership is necessary. To discover a credit union that will work with your circumstances, you may have to look for a local credit union or an online credit union.

FAQS

What Type Of Loan Is Best For Bad Credit In The UK?

A guarantor loan is a sort of loan where a third party must stand in as your guarantee, promising to repay the debt in the event you cannot do so. Smaller loans between a few hundred and a few thousand pounds are intended for guarantor loans.

What Credit Score Do I Need To Consolidate My Debt In The UK?

Although bad-credit debt consolidation providers exist and may take credit scores as low as 600, you’ll typically need a credit score of approximately 650.

Can I Consolidate All My Debt Into One Payment?

You will only have to make one monthly payment if you consolidate your debts, but your debt may not be reduced or paid off sooner. A more extended loan period, a lower interest rate, or a combination of the two may result in reduced payments.

Can You Get A Loan With Not-So-Good Credit?

Numerous banks, credit unions, and internet lenders provide loans to borrowers with bad credit, but each organization has a different standard for who qualifies as a “creditworthy borrower.” It’s essential to look around for the finest selection since some lenders have more stringent standards than others.

You can learn more from the video below

About Author

debt consolidation loans for bad credit in UK
Lydia Alolade
I am a professional article and e-book writer with 4 years of experience, I write on well research content on cryptocurrency, stocks, loans and finances.

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