If you are struggling with debt, a debt consolidation loan (or remortgage) can be a lifeline. It can allow you to stretch your repayments over a longer a period of time, meaning your monthly repayments and interest rates are potentially lower – especially if you are consolidating debts from high-interest credit such as certain credit cards (although the total amount you repay may be higher in the long run).

But many people with smaller debts simply want to benefit from the convenience of a single, potentially lower monthly payment.

Useful for smaller debts

A spokesperson for Think Money says that a debt consolidation loan is equally valid for smaller debts as it is for larger ones. “You don’t have to be dealing with serious debts to look for a loan,” she says. “While we do help a lot of people in serious debt with our debt consolidation and other debt management services, an increasing number of enquiries are from people more than capable of paying their debts off, but who want to do it on a more flexible basis.

“Take for example an overdraft – a debt consolidation loan could be a quick way of paying it off and keeping the bank happy, while at the same time setting up a regular payment to pay off the loan gradually. Often that’s a lot more effective than paying the overdraft off in bits when you have the spare cash, and avoids the extra interest that would build up if the overdraft was left for longer.”

But that’s not to underestimate the potential benefits of a debt consolidation loan to those with more substantial debts, the spokesperson continues. “The flexibility and convenience a debt consolidation loan offers could be the difference between being able to afford to repay your debts and falling behind on payments if something unexpected happens in your finances.

“If you are in serious debt, it’s essential that you speak to an expert debt adviser. They can advise you on a range of debt solutions, including debt management plans, IVAs etc., and help you decide which is best for you.”