Debt consolidation is one of the most effective solutions for managing debt. It allows you to manage multiple debts by merging them all into a single loan, which is a debt consolidation loan. Learn how it works, its benefits, interest rates and why Givemyloan can help you to compare and get the best deal.

What is a debt consolidation loan?

A debt consolidation loan is a type of personal loan that is used to pay multiple existing debts. These can be credit cards, payday loans, overdrafts, etc. Paying several debt instalments at different interest rates can be stressful and expensive. Consolidate all of them in one loan at a lower interest rate with a longer tenure.

Key features of the best debt consolidation loans -

  • Single monthly repayment
  • Lower interest rate
  • Longer repayment tenure
  • Fixed repayment schedule
  • More savings
  • Simplified payments

Types of loans for consolidating debts

  • Unsecured debt consolidation loans – For this type, you do not need to provide collateral.
  • Secured debt consolidation loans – You need to secure the debt by pledging an asset.

Who qualifies for a debt consolidation loan in Ireland?

Follow the eligibility and documentation requirements below if you are looking for a loan to consolidate debt.

Eligibility requirements Documents required
18 years or older Recent income proof
Regular and verifiable income ID and address proof
Permanent resident of Ireland Bank statement (3-6 months)
Debt level sufficient to repay loan List of existing debts
Bank account PPS number (May, may not be needed)

How do debt consolidation loans work?

Debt consolidation loans in Ireland work through a straightforward process. You just need to follow the decided steps and get all your debts merged into one loan.

  • Assess your current debts and loans – Know all your debts and their total cost. Then only is it possible to apply for a certain amount of loan. All the debts should be encapsulated in that one loan. Hence, firstly, assess all your pending debts that you want to be merged into one.
  • Pre-qualify for a debt consolidation loan – Now, when you are clear about how much you owe, apply for the loan quotes. Choose several lenders and apply to pre-qualify for multiple deals without a hard credit check. Compare the quotes and choose one at Givemyloan.
How do debt consolidation loans work?
  • Choose the best loan offer – Once you finalise a loan offer, apply for it with all the necessary documents. Don't skip to fulfil any eligibility or documentation condition. Applying with improper details is a strong reason for loan rejection.
  • Pay off merged debts – After you get the loan, pay off all the debts that were merged into one debt. Now repay conveniently one instalment at a lower rate in place of multiple ones of different rates.
  • Repay timely one instalment – Pay timely all instalments. Otherwise, you may fall into another debt trap. Debt consolidation is just a tool to manage scattered obligations. Don't use it frequently, as it can affect your credit score, thoroughly showing your poor financial management.

An example of a debt consolidation

Samantha - 39 years old, who lives in Dublin

She has the following debts -

  • Remaining personal loan debt - €7,500 at ~12% APR
  • Store-finance debt - €4,500 at ~17% APR
  • Pending credit-card debt - €8,000 at ~18% APR
  • Total outstanding - €20,000

Samantha decides to take a debt consolidation loan with the following specifications.

  • Amount borrowed: €20,000
  • Term: 7 years (84 months)
  • Monthly repayment: approximately €331
  • Total interest cost: ~ €27,804 − €20,000 = €7,804
  • Total amount repaid over 7 years: ~ €331 × 84 = €27,804

What did she achieve after debt consolidation?

  • Three separate repayments replaced by a single monthly instalment, i.e. (€331)
  • Overall lower fixed interest rate of 9.5%
  • Simplified repayment budgeting
  • Prevents administrative burden and stress, but pays €7,800 in interest over 7 years.

Due to a longer tenure, despite the increased cost of merged debts, managing repayments became easier.

Can I get debt consolidation loans with bad credit?

Yes, you can. Still, you get approval if your current repayment ability is good. However, while applying for the best debt consolidation loans for bad credit, you may face the following challenges. But don't worry, there are also ways to improve approval chances.

Challenges Ways to improve approval chances
Higher interest rate due to a risky credit profile Check credit report for errors – A rectified report is vital to avoid confusion for lenders.
Shorter loan tenure Verifiable income – All your income sources should be documented. Regularity is also an important factor.
Affordability hurdle if the debt-to-income ratio is high Avoid taking new loans –Applying for a new loan can affect your repayment ability for consolidation loans.
Credit score impact for late or missed repayments. Hire a broker – You can access multiple lenders to compare and choose the best offer.

Will there be a soft or hard credit check on debt consolidation loans?

When you apply for a loan to consolidate debt, lenders perform a mandatory credit check to assess your affordability and credit history. Most of them start with a soft credit check to review your credit profile without impacting your credit score. It allows us to determine affordable loans and interest rates.

Once your loan application proceeds, a hard credit check may be conducted. It will be visible on your credit report, but it is a formal requirement under responsible lending. We suggest that you still go for debt consolidation as it will improve your overall credit profile. Loan repayments are also manageable.

Difference between debt consolidation and refinancing

Most of our customers get confused and sometimes consider debt consolidation and refinancing as the same. But both are different.

Point of difference Debt consolidation Refinancing
Goal Combine multiple debts into one loan. Replaces an existing loan with a new loan at affordable terms.
Focus Simplify repayments at a lower interest rate Extending tenure for one loan while lowering the cost.
Who Benefits Those who owe multiple debts with high interest rate Who want better loan conditions for improved credit with lower rates.
Example Combine credit card and two payday loans into one. Refinancing a mortgage at a lower rate and longer tenure.

What are the benefits of consolidating debt?

For some potential benefits, you can choose these loans and attain financial stability while paying off debts faster.

  • One instalment in place of many – Of course, this is why merging multiple loans into one is so important. You can stop compromising your daily expenses due to various instalments. Combine them all in one loan and get the spare money left from your salary to be used for other purposes, like savings.
  • Simplified budgeting – When you have to worry only about one repayment for one loan in place of multiple ones, easier repayment budgeting is possible. You can even plan to pay the loan early without compromising on other financial goals in life.
  • Get lower rates despite poor credit – Getting a lower interest rate is one of the primary objectives of consolidation. This downsizes the instalment, making it hassle-free to pay for one loan. These low-cost debt consolidation loans lighten your burden, providing mental peace.
  • Longer repayment tenure – The longer tenure gives you ample time to pay the loan. Due to extended tenure, you can pay smaller instalments, and you can also plan for part-payment or early repayment.
  • Reduces overall cost – Yes, due to longer tenure, you may end up paying more for a consolidation loan. But still, that is less compared to the total of all those multiple debts you were paying at varied interest rates.
  • Boost your credit score faster – With timely payments, you can see a promising rise in your credit score. This is good for future loan approval chances and also opens affordable insurance and investment options for you.
  • No guarantor or collateral required – Prove your repayment ability and borrow without any guarantor or placing an asset. But if your income is not stable and repayment capacity is weak, you can think of consolidating debt with a guarantor in Ireland or apply for a secured loan.

What are typical rates (banks vs credit unions vs brokers)??

Here is an insight into how varied platforms differ in interest rates. Choose the one that offers a low interest debt consolidation loan.

Lender Type Typical APR range Loan Features
Banks 7.5% to 14.6% Personalised deals for existing customers
Credit Union 7% to 14% Fixed-rate loan offers for union members
Brokers 6% to 20% Compare multiple loan offers at one platform

Why should I choose Givemyloan for debt consolidation loans?

The reasons below validate the significance of loan broker platforms like us as compared to applying to lenders directly.

  • Access to multiple lenders – Compare many loan providers at one platform to get the deals on a debt consolidation loan in Ireland for bad credit.
  • Special support for all credit scores – Save time and look for deals suitable for excellent, good, fair, poor or very poor credit scores.
  • Fast and hassle-free process – Get free loan quotes from multiple lenders before starting the formal loan process.
  • Personalised loan matching – We will match your requirements with only those loan providers in Ireland that fit your income, goals and affordability.
  • Transparency and trustworthy guidance – No hidden fees or marketing jargons, and make the lenders reveal all their costs upfront.
  • Competitive interest rates – Our broad lender network ensures you get affordable interest rates with flexible

We are here to help you find the best debt consolidation loan in Ireland, secured or unsecured. If you are struggling with multiple pending debts, take a smart move of merging all debts into one.

Find My Best Loan Offer

Frequently Asked Questions

Can I pay off the consolidation loan early?

Is debt consolidation a good idea?

How much can I borrow to consolidate my debts?

Is debt consolidation better than a Debt Settlement Arrangement (DSA)?

Can I avail of a loan if I am unemployed?

Can I get a debt consolidation loan with no credit check?

Can I consolidate debt with a guarantor?

Are low-interest debt consolidation loans available in Ireland?