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How to get an unsecured loan to consolidate debt

You're probably already familiar with unsecured loans for bad credit but just in case you're not, they are essentially loans that do not require collateral. The drawback is that it comes with very high interest. The great thing about unsecured loans is that some of them can grant access to decently large sums of money, if you want to make an expensive purchase, or, in this case, consolidate debt. Other uses include unsecured loans for people with bad credit or unemployed people. Read more on the pros and cons of unsecured loans for bad credit.

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How to get an unsecured loan to consolidate debt

First, let's talk about how debt consolidation works – a consolidation loan is needed when you have multiple sources of debt, and they become difficult to manage. You need to pay in multiple places, various amounts, and it's hard to keep track of all of them and afford all of them. A consolidation loan allows you to put all that debt into one place so that it's more manageable. In addition, you can negotiate different repayment terms so that you can pay smaller instalments, for example, which is going to be more affordable.

What kind of unsecured loan should you get?

Generally speaking, when you're in a situation where you might need debt consolidation, the amount is fairly large, so not just any kind of loan will do. You are probably looking for a larger loan, which is why you should consider unsecured loans. A loan like this is going to give you access to a maximum of around £50,000. How to get large unsecured loans? Do your best to have a good financial status.

If you need less money, you might also consider same day loans, which can go up to £5000, £10000, or £25000. Again, how much you get depends on how much security you present for the lender. Because you don't offer collateral, you need to have otherwise good circumstances, like a good credit score and income over a certain threshold. You can check your credit score at Experian

Can you get an unsecured loan with your credit score?

As we mentioned, when you're looking for a consolidation loan, you need to get a larger amount of money, so credit score will come into play. What's your credit score like? Do you have good credit? If not, you can look for places where you can get unsecured loans for bad credit. What are bad credit loans? They are loans meant for people who do not have a perfect credit score. Of course, in that case, you need to lower your expectations regarding the amount you are allowed to borrow.

Do you have a guarantor for your unsecured loan?

Another request the lending company might have is a guarantor. When you don't have good credit, you can offer security by having someone else co-sign the loan with you. This way, if you find yourself unable to pay at any point and you default on the loan, the guarantor needs to assume the responsibility for you and cover the repayment that you owe. Finding someone who is willing to do this can be difficult, as it is a risky position to put someone in.

What are the advantages of an unsecured loan for debt consolidation?

Debt consolidation loans may not seem trustworthy – how is taking out another loan going to help you with your current debt? But in reality, they have several advantages for someone who is struggling with multiple sources of debt:

  • They help you get rid of debt
  • You pay one instalment a month instead of several
  • Creditors stop calling you
  • You can potentially eliminate interest

Is your income enough for an unsecured loan?

If you want to get a large personal loan, you need to have a regular income, so employment is a must. Not only that, but your income also needs to be above a certain amount. Different financial institutions will have different thresholds and different requirements, so be sure to browse different offers before you make your decision; one of them might be suitable for your specific circumstances.

How can you improve your chances of getting an unsecured loan?
It is clear by now that a better financial status provides more security to the lender and enables you to get a larger loan. So what are some practical things you can you do to improve your status?
Close additional credit cards If you have credit card debt and you currently have more than one credit card open, it's time to close them, unless they carry debt. More credit cards do not mean more money; they mean more potential debt and a quickly degrading credit score. Keep one credit card, so that it's more manageable.
Avoid major expenses If you're planning on applying for a loan, now is not the time for a major expense, if you can avoid it. If you don't need a different car right now, hold off on that purchase. You want your credit to be as good as it can be.
Find a better paying job I know it's easier said than done, but your income counts towards your security, in the eyes of the lending company. If you can't efficiently manage your finances, perhaps it's time to start looking for a higher wage that will help you maintain financial stability. In addition, it will open up more opportunities for consolidation loans.

In conclusion, getting an unsecured loan in order to consolidate debt can be a very smart move for your financial well-being. Paying various different debts in multiple places is a faff and can be incredibly burdensome, so consolidating them all in one place is significantly easier. But what kind of unsecured loan should you get? It all depends on your credit score, employment, and general financial status, so you need to take all these aspects into consideration.

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