In short: The best debt consolidation company depends on whether you can afford to borrow again. If you can, compare lenders such as Tesco Bank, Nationwide and Zopa on the total amount you’ll repay, not just the monthly payment. If your debts have already become unaffordable, get free debt advice first from a charity such as StepChange or National Debtline, or speak to a debt solution provider like PennyPlan, before taking out another loan.
Several debts, different repayment dates and interest charges that keep eating into your monthly budget? A debt consolidation company could help you simplify your repayments, but choosing the right provider means understanding exactly what you’re signing up for.
Some companies offer loans to combine existing debts into one monthly payment. Others provide debt advice and alternative repayment arrangements that may be more suitable if you’re already struggling financially.
We’ve put together a comparison of debt consolidation companies in the UK, covering the services they offer, what to look out for and the costs worth checking before making a decision. You’ll also find guidance on alternative debt solutions if taking out another loan isn’t the right move.
Struggling to keep up with several debts? Check if you qualify with PennyPlan. Our advice is free and there’s no obligation.
What Is a Debt Consolidation Company?
Debt consolidation companies offer different ways to help people manage multiple outstanding debts. The services available will depend on the provider, and it’s important to understand the difference before making a decision.
Some companies offer personal loans that allow you to pay off several existing debts and replace them with one monthly repayment. The new loan will have its own interest rate, repayment term and conditions.
Others provide debt advice and help people explore repayment arrangements or formal debt solutions. These services can be particularly relevant if your existing payments have become unaffordable.
A consolidation loan may simplify your finances, but it won’t automatically reduce the total amount you owe. Depending on the interest rate and repayment period, you could end up paying more overall.
Best Debt Consolidation Companies in the UK: Our Comparison
The right company will depend on your financial circumstances, credit history and what you’re hoping to achieve. A personal loan may suit someone who can comfortably afford repayments, while debt advice could be a better starting point for someone already struggling with arrears.
Here’s how six UK providers compare. We’ve started with the free debt advice services, PennyPlan, StepChange and National Debtline, because that’s the best place to start if your repayments have become hard to manage. If you can comfortably afford a new loan, the three lenders after them are worth comparing.
| Company | Provider type | Services offered |
|---|---|---|
| PennyPlan | Debt solution provider | Free debt advice and debt solutions, including IVAs |
| StepChange | Debt charity | Free debt advice and debt solutions |
| National Debtline | Debt advice charity | Free, independent debt advice |
| Tesco Bank | Personal loan lender | Unsecured debt consolidation loans |
| Nationwide | Personal loan lender | Fixed-term personal loans for debt consolidation |
| Zopa | Digital lender | Online debt consolidation loans |
1. PennyPlan
At PennyPlan, we help people explore their options when debt repayments have become difficult to manage. Our advice is free and there’s no obligation.
Our team can assess your financial circumstances and explain potential debt solutions, including Individual Voluntary Arrangements (IVAs), Debt Management Plans (DMPs) and Debt Relief Orders (DROs), where appropriate.
An IVA, for example, may allow eligible individuals to make affordable contributions towards qualifying unsecured debts, with remaining balances written off following successful completion. Fees, eligibility requirements and potential consequences will need to be considered carefully.
We’ll help you understand the available options and what they could mean for your finances.
Best suited to: People dealing with unaffordable debts who want to explore alternatives to taking out another loan.
2. StepChange Debt Charity
StepChange provides free debt advice to people experiencing financial difficulties. Its advisers can review your circumstances and explain potential debt solutions, including Debt Management Plans (DMPs), Debt Relief Orders (DROs) and other arrangements.
The charity doesn’t lend money, so it won’t offer you a consolidation loan. Its focus is on helping people understand their financial position and identify suitable ways to deal with outstanding debts.
Best suited to: People who are struggling with repayments and want free, impartial guidance on their options.
3. National Debtline
National Debtline offers free, independent debt advice, alongside budgeting tools and practical information about dealing with creditors.
The service can help you understand what action creditors may take, how to prioritise essential payments and which debt solutions could be available.
You can also access guidance on negotiating with creditors and preparing a realistic household budget.
Best suited to: People who want independent advice before agreeing to a repayment arrangement or applying for further borrowing.
4. Tesco Bank
Tesco Bank offers unsecured personal loans that can be used to pay off existing debts, including credit cards and other loans. A single monthly repayment may make budgeting easier if you’re currently managing several credit agreements.
You can check your eligibility before applying, although the interest rate you’re offered will depend on your circumstances. Since November 2024, Tesco Bank loans have been provided by Barclays, which runs them under the Tesco Bank name.
Before proceeding, compare the total cost of the new loan against your existing debts. A longer repayment period could mean paying more interest overall.
Best suited to: People who can afford a new loan and want to compare fixed repayments against their existing borrowing.
5. Nationwide
Nationwide offers debt consolidation loans that allow eligible borrowers to combine existing debts into one fixed monthly payment.
You’ll need to hold a Nationwide current account, savings account or mortgage to apply. Loan approval and the rate offered will depend on your financial circumstances.
If you’re considering Nationwide, check how the proposed repayment term affects the overall cost, particularly if your existing debts could be cleared sooner.
Best suited to: Eligible Nationwide customers looking to simplify their existing borrowing through a personal loan.
6. Zopa
Zopa offers online debt consolidation loans that can be used to repay existing credit cards and personal loans.
Its digital application process allows customers to explore borrowing options online. Zopa says past credit problems don’t automatically rule you out, but whether you’re accepted, and the rate you’re offered, will depend on your credit history and affordability.
A new loan could make repayments easier to organise, but you’ll still need to cover the agreed instalments alongside your regular living expenses.
Best suited to: Borrowers who prefer an online application process and can comfortably manage the proposed repayments.
Find out where you stand.
Leave your details and an adviser will call you back for free.
Not ready to talk yet? Try our IVA calculator to see what an IVA could look like for you.
Debt Consolidation Lenders vs Debt Solution Providers: What’s the Difference?
Although the services can appear similar, debt consolidation lenders and debt solution providers approach outstanding debts differently. Debt consolidation lenders offer new borrowing that can be used to repay existing credit agreements. Once those balances are cleared, you’ll make repayments to the new lender under the agreed terms.
The main advantage is simplicity. Instead of managing several creditors, you’ll usually have one monthly payment. However, interest will still apply, and the loan may cost more over time.
Debt solution providers assess your financial circumstances and help you explore ways to deal with debts you may no longer be able to afford.
Depending on your situation, an arrangement could involve reduced monthly payments, negotiations with creditors or a formal debt solution. Some formal solutions may result in qualifying debt being written off, although they can affect your credit rating and carry significant restrictions.
If you’re unsure which approach is appropriate, a debt assessment can help you understand the differences before committing.
How Much Does Debt Consolidation Cost?
The cost of debt consolidation depends on the interest rate, repayment period and any fees attached to the loan.
A lower monthly repayment might make your debts easier to manage, particularly if you’re struggling to keep up with several payments. However, spreading repayments over a longer period could increase the total amount of interest you pay.
For example, a £10,000 consolidation loan with a fixed annual interest rate of 12%, calculated monthly, and repaid over five years would cost approximately £222.44 per month. You’d repay around £13,347 in total, including approximately £3,347 in interest, assuming no additional fees.
The amount you actually pay will depend on the lender’s offer and the terms of your agreement. It’s also worth checking whether your existing lenders charge early repayment fees before consolidating your debts.
A debt calculator can help you assess your financial circumstances and understand what you could afford each month. However, an estimated debt solution payment isn’t the same as a consolidation loan quotation.
How to Choose a Debt Consolidation Company
Before choosing a provider, it’s worth looking beyond the advertised monthly repayment. The terms of the agreement and the support available can have a significant effect on your finances.
Check FCA Authorisation
The Financial Conduct Authority (FCA) regulates many consumer credit and debt advice activities in the UK. You can use the FCA’s Firm Checker to confirm whether a company has the appropriate permissions for the services it offers.
Be cautious of businesses that make unclear claims about their regulatory status or are unwilling to explain how their services operate.
Compare the Total Repayment Cost
A lower monthly payment doesn’t necessarily mean a cheaper loan. Check the interest rate, repayment period and total amount repayable. If the new loan runs for longer than your existing credit agreements, you may pay more interest overall.
The representative APR advertised by a lender may also differ from the rate you’re offered after an affordability assessment.
Understand Any Fees
Some lenders and brokers charge fees, while formal debt solutions may involve costs for setting up and managing an arrangement.
Ask for a clear explanation of all charges before agreeing to proceed. For debt solutions such as IVAs, you should also understand how fees affect the money paid to creditors.
Read Independent Reviews
Customer reviews can provide useful insight into how a company communicates, handles enquiries and supports people throughout an agreement.
Look for recent feedback and pay attention to how the provider responds when customers raise concerns.
Make Sure the Repayments Are Affordable
Your monthly repayment should leave enough money for essential expenses, including rent or mortgage payments, food, utilities and transport. A company should assess your financial circumstances before recommending a loan or debt solution.
If the proposed arrangement leaves you struggling to cover everyday costs, it may be unsuitable.
Red Flags to Watch for When Comparing Debt Consolidation Companies
Debt consolidation companies should explain their services clearly and give you enough information to make an informed decision. Certain claims and sales practices deserve closer attention.
Guaranteed Loan Approval
Be wary of companies promising guaranteed approval regardless of your credit history. Legitimate lenders must consider affordability and creditworthiness, so approval can’t be guaranteed before the relevant checks.
Unexpected Upfront Payments
Some legitimate services may charge disclosed fees, but unexpected requests for payment before releasing a promised loan can be a warning sign of fraud. Check the company’s details carefully and avoid sending money to unfamiliar accounts without verifying who you’re dealing with.
Promises to Write Off Debt Immediately
Debt consolidation loans don’t automatically write off existing debts. They replace those balances with a new credit agreement. Certain formal debt solutions may allow qualifying debts to be written off, but eligibility requirements, restrictions and consequences will apply.
Pressure to Sign Up Quickly
A reputable provider should give you time to review the terms, ask questions and consider your options. Be cautious if someone repeatedly pressures you to make an immediate decision or discourages you from seeking independent advice.
Limited Information About Alternatives
If you’re seeking debt advice, the provider should consider your circumstances and explain suitable options, including access to free debt advice. A company that promotes a single fee-paying solution without discussing relevant alternatives may not be giving you the information needed to make an informed choice.
Is a Debt Consolidation Loan Right for You?
A consolidation loan could be worth considering if you’ve got a reliable income, can afford the new repayments and would benefit financially from combining existing debts. You may find it easier to budget when your borrowing is covered by one monthly payment. A lower interest rate could also reduce your borrowing costs, depending on the repayment term.
However, taking out another loan can create problems if you’re already struggling to cover essential expenses. Secured consolidation loans carry additional risks because your home could be repossessed if you fail to maintain repayments.
If you’ve missed payments, are relying on credit for everyday spending or have little money left after covering essential bills, seeking debt advice may be a more appropriate starting point.
What Are the Alternatives to Debt Consolidation Loans?
If further borrowing isn’t suitable, several debt solutions may help you deal with outstanding balances.
The options available will depend on your financial circumstances, the types of debt involved and where you live.
Debt Management Plan (DMP)
A Debt Management Plan allows you to make affordable monthly payments towards qualifying unsecured debts.
The money is distributed among participating creditors, although you’re generally expected to repay the outstanding balances in full.
Creditors may agree to freeze interest or charges, but they aren’t required to do so. A DMP is also an informal arrangement, so creditors can still take further action.
Individual Voluntary Arrangement (IVA)
An Individual Voluntary Arrangement is a legally binding agreement that allows eligible people to make affordable contributions towards qualifying unsecured debts.
IVAs usually last five or six years, and remaining qualifying debts may be written off after successful completion.
However, an IVA can affect your credit rating, assets and financial circumstances. Fees apply, and failing to meet the agreement’s terms could result in its failure.
Our IVA calculator can help you see how your income, household expenses and outstanding debts may affect the amount you could contribute each month.
Debt Relief Order (DRO)
A Debt Relief Order may be available to eligible people in England and Wales with qualifying debts of up to £50,000, limited disposable income and assets within the permitted thresholds.
A DRO usually lasts 12 months, during which creditors included in the order generally can’t pursue payment without permission.
Qualifying debts are normally written off at the end of the period, provided your circumstances haven’t changed in a way that affects eligibility.
Arranging Payments Directly With Creditors
You may be able to negotiate reduced repayments or temporary support directly with your creditors.
Some lenders may agree to freeze interest, suspend charges or accept a revised payment arrangement.
Explain your circumstances clearly, provide an accurate budget and ask for any agreement to be confirmed in writing.
If you’re unsure what to say or how much to offer, we’ve covered the steps involved in negotiating with creditors effectively, including how to prepare before getting in touch.
How PennyPlan Can Help You Explore Your Debt Options
If you’ve been comparing debt consolidation companies because your monthly repayments have become difficult to manage, it may be worth reviewing your finances before applying for another loan.
At PennyPlan, we can help you understand the debt solutions available based on your circumstances, including the potential costs, restrictions and implications of each arrangement.
Our team will consider your outstanding debts, income and essential expenses to help identify possible next steps.
You can start by telling us a little about your financial situation. Get in touch today.
FAQs About Debt Consolidation Companies in the UK
Which Is the Best Debt Consolidation Company in the UK?
The most suitable company will depend on your circumstances and the service you need. If you can comfortably afford a consolidation loan, compare lenders based on their actual rates, repayment terms and total costs. If your debts have become unaffordable, free debt advice can help you assess alternatives.
Can I Get a Debt Consolidation Loan With Bad Credit?
Some lenders consider applications from people with poor credit histories, although approval isn’t guaranteed. You may face higher interest rates or stricter eligibility requirements. Check whether the proposed repayments are affordable before applying.
Will Debt Consolidation Affect My Credit Score?
Applying for a consolidation loan may involve a hard credit search, which can temporarily affect your credit score. Your future repayment history will also influence your credit record. Missed payments could cause further damage, while consistent repayments may help demonstrate responsible credit management.
Can Debt Consolidation Reduce My Monthly Payments?
Yes, a consolidation loan could reduce your monthly repayments through a lower interest rate or longer repayment term. However, extending the loan can increase the total amount of interest you pay, so compare the full repayment cost before proceeding.
Are Debt Consolidation Companies Regulated in the UK?
Many lenders, credit brokers and debt advice providers must have appropriate FCA authorisation to carry out regulated activities. The exact requirements depend on the services offered. You can check a company’s regulatory status using the FCA’s Firm Checker.
Can I Consolidate Debt Without Taking Out a Loan?
You may be able to combine repayments through a Debt Management Plan or another suitable debt arrangement. However, these solutions work differently from consolidation loans and may have implications for your credit record, repayment obligations and finances.
Is Debt Consolidation Better Than an IVA?
A consolidation loan may be appropriate if you can afford to repay your borrowing under the new agreement. An IVA is intended for eligible people with unaffordable debts and involves different legal and financial consequences. Our guide to debt consolidation vs IVA explains the differences.
Can I Get a Government Debt Consolidation Loan?
There isn’t a general UK government-backed debt consolidation loan scheme for people struggling with personal debts. However, statutory debt solutions and free debt advice services are available. Be cautious of companies advertising government-backed consolidation schemes without clearly explaining their services.
