What is a debt consolidation loan and how does it work?

30 Aug 2026, 03:00
Q A Reader Asker

What is a debt consolidation loan and how does it work?

A PoundWise Team Answered by

A debt consolidation loan is a financial product that combines multiple debts into a single loan with one monthly payment. This can simplify managing your finances and potentially lower your interest rate if you qualify. Typically, you would take out a new loan to pay off existing debts, which might include credit cards, personal loans, or other liabilities. It's essential to consider the terms and fees associated with the new loan, as well as your ability to repay it. For tailored advice, you might want to consult a financial adviser or visit the official gov.uk page for more information.

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