Debt Consolidation Loans
Combining multiple debts for easier management. Find out which loans you could be eligible for with our partner Aro and their trusted panel of lenders. Just like Asda Money, Aro is a credit broker, not a lender.
If you take out a product through Aro, Asda Money will receive a commission payment from Aro. The amount charged will be in connection with the specific product selected and so different amounts of commission are received. For more information please see our FAQs.
When you check your eligibility below you will be transferred to our partner Aro.
Representative
29.7%
APR
Credit card debt building up? Extended your overdraft one too many times? Working with our partner Aro, they can help you find debt consolidation loans between £1,000 - £25,000 to pay off your existing debts, turning them into one easier-to-manage payment and potentially reducing the interest you pay.
Search Aro's panel of trusted UK lenders to find the right loan at the right rate for you. You can check if you’re eligible for a loan without impacting your credit score and get an online decision in minutes.
If you are thinking of consolidating existing borrowing, you should be aware that you may be extending the terms of the debt and increasing the total amount you repay.
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Loan options that work around you
What is a debt consolidation loan?
You can use a debt consolidation loan to pay off multiple existing debts, resulting in you only having one monthly repayment. It makes managing your debts simpler and helps you to keep track of your general monthly outgoings.
Secured vs. unsecured debt consolidation loans
Most debt consolidation loans are ‘unsecured’, meaning lenders approve applications based on your credit history. However, some are ‘secured’ against an asset, the most common being a house. If you choose a secured debt consolidation loan, you need to consider that the bank, building society or lender could seize your asset from you if you fail to make repayments.
Your home may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it.
Aro only provide access to unsecured debt consolidation loans.
How do debt consolidation loans work?
At Asda Money, our partner Aro and their panel of trusted lenders can provide access to personal loans that you can use for debt consolidation and following one initial eligibility check, you’ll see all the available debt consolidation loans that match your requirements. They perform a soft search on your credit history, which won’t affect your ability to gain future credit.
Whilst they don’t offer a specialist debt consolidation product, the loans you see from their lender panel will be the ones that most closely match your requirements. It’s then up to you to compare all the available loans to find the one that works for you.
What are the benefits of debt consolidation loans?
- Streamlined finances: With all your debts combined into one loan, you only have one monthly repayment and interest rate to keep track of.
- Improved budgeting: A debt consolidation loan combines existing debts into one, making monthly repayments lower and easier to manage. This should reduce the risk of making late repayments or going into unarranged overdrafts.
- Improved credit rating: If a debt consolidation loan helps you keep track of your repayments, this may improve your credit rating. Paying all your debts off on time will prove to future lenders that you’re a responsible borrower.
- Reduced monthly repayments: A debt consolidation loan reduce your outgoings each month. This is because your new loan could have a lower interest rate than your current combined rate of the previous debts.
- Reduce the time to pay it off: With lower repayments, you may be able to pay extra each month. You’ll then reduce your loan more quickly.
What should I be aware of before I consolidate my debt?
Don’t borrow more than you need: When applying for a debt consolidation loan, be careful not to request more than you need. You’ll still need to repay the loan in the future, so it’s advisable to ask for the minimum you need to cover your other loans.
- You could increase your overall borrowing: Although a debt consolidation loan may save you money each month, the term may be longer. Be aware that you may be extending the debt term and increasing the total amount you repay when consolidating existing borrowing.
- The risk of missing monthly payments: Make sure you can afford the monthly repayment on your debt consolidation loan. If you miss any payments, it can negatively impact your credit score.
- Be careful not to increase spending: Borrowing on a debt consolidation loan and paying off credit cards may make it feel like you have more money available. It’s tempting to start using your credit cards again and increasing your overall debt.
- It doesn’t address underlying financial problems: Borrowing more money to pay off debts doesn’t tackle how you got into debt into the first place. If you don’t look at your financial and spending habits, it’s easy for debt to build up.
Difference between debt consolidation and debt management
These terms sound similar but refer to different things. ‘Debt consolidation’ means taking out credit through a loan to pay off your existing debts. ‘Debt management’ is when you work with a debt management plan provider to negotiate affordable payments with the companies you owe money to.
What can I use a debt consolidation loan for?
You can use debt consolidation loans to pay off existing debts and consolidate them into one easier-to-manage loan. Many people use them to pay off credit cards, personal loans, store cards or overdrafts.
Your interest rate or APR may be much higher on credit cards, store cards or through an overdraft than it would be with a debt consolidation loan. It may make sense to pay these debts off and secure a lower interest rate with one loan.
Debt consolidation with bad credit
You may have a poor credit score if you have existing debts and have previously struggled with repayments. This could affect your chances of getting a debt consolidation loan now. Some specialist lenders may offer you a loan, but the interest rate will likely be high.
Asda Money does not offer secured debt consolidation loans, but other lenders through our partner Aro may. With a secured loan, the lender uses your assets (such as your home) as ‘security’. Remember, with this type of loan, you risk losing your assets or home if you default on your payments.
Looking for a loan to fund something specific? At Asda Money, working with our partner Aro will help you compare loans for everything from Weddings and Holidays to Cars and Home Improvements.
Top Personal Loans FAQs:
- Why choose a Personal Loan?
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Asda have partnered with Aro, who are a leading credit broker. This means customers can get access to a carefully selected lender panel who provide personal loans.
- How does it work?
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With one simple check, you can search Aro’s panel of selected lenders to see what loan options you have. Once you’ve been approved you will receive your funds, which in some instances could be on the same day.
- How much can I borrow?
- Will applying affect my credit rating?
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No. One of the best things about working with our partner Aro, is you get access to their panel of trusted lenders with no hard credit footprint left on your credit file. When you apply, a soft search is completed which doesn’t harm your credit score.
However, if you do proceed with an offer from your search with them, the lender will complete a hard search. This will show on your credit file.
- What credit score do I need for a bank loan?
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Strictly speaking, there is no minimum credit score for you to be approved for a personal loan. If you have a strong credit score, more lenders may be willing to lend to you with better interest rates on offer. If you have a lower credit score and have had problems borrowing in the past, you may find a smaller pool of lenders are willing to lend to you. You may even have to look for a specialist lender that offers loans for bad credit.
- Can I get a loan with a CCJ?
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If you have a county court judgement (CCJ) against your name, you may struggle to get a personal loan with mainstream lenders. However, you may find specialist lenders that are willing to lend to you.
- Can I borrow money with bad credit?
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If you have bad credit or have had money problems in the past, you may find that some lenders aren’t willing to lend to you. Those that are may only do so with higher interest rates. It’s worth looking at specialist lenders for bad credit loans. Or you can work on your credit score to improve it before applying for a loan.
- Why won’t my bank give me a personal loan?
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Lenders look at a variety of factors when deciding on whether or not to offer you a loan. They each have their own criteria which will take in your credit score, job, monthly income and more. If you have been rejected by a lender, you can always ask them why and hope they will give you some insight into their lending criteria. They may direct you to one of the main three credit bureaus to find out more information
- Can I borrow money with a poor credit score?
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If you have a poor credit score or have had money problems in the past, you may find that some lenders aren’t willing to lend to you. Those that are may only do so with higher interest rates. It’s worth looking at specialist lenders for bad credit loans. Or you can work on your credit score to improve it before applying for a loan.
- How to get the lowest rate for a personal loan?
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The interest rates offered by lenders depend on a range of factors including how much you’re borrowing and the length of the loan. They will also look at your credit score. To help get a lower rate, you can look to improve your credit score by signing up to the electoral register, closing old accounts, checking for any errors on your report, and paying all your bills on time. You may also consider increasing the length of the loan or borrowing less.
- Can I take out a loan if I already have one?
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Yes, you can. When you apply for a new personal loan, lenders will look at your existing borrowing to see if you can afford the second loan. Many people choose to take out a new loan to consolidate existing borrowing – whether loans or credit cards – into one loan with a single monthly repayment.
- If I already have bad credit, what could this mean for my application?
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When you apply for a personal loan with a lender, this will show up on your credit file. Your credit score may take a very small hit in the short term once you take the loan out. But if you pay your monthly payments on time and in full, this can have a positive impact on your credit score.
About our trusted provider, Aro
We’ve partnered with Aro to provide our customers the very best loan options from a panel of handpicked trusted lenders. Asda is in partnership with Aro. Both Asda Money and Aro are credit brokers, not lenders.
Following one simple eligibility check, your loan options with be displayed. It’s also a safe way to view your options without negatively affecting your credit rating.
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ASDA Money is a trading name of Asda Financial Services Ltd who are an Introducer Appointed Representative of Aro who are authorised and regulated by the Financial Conduct Authority. Aro acts as a credit broker and not as a lender.
Terms and conditions apply. UK residents aged 18 and over. If you take out a loan, Asda Money and Aro receive a commission payment from the lender. Different amounts of commission are received from different lenders and the amount will be either a fixed amount or a percentage of the amount you borrow and dependent on the lender you select. We will not charge you a fee for our services.