A debt consolidation loan is exactly what the name suggests. You take out another loan sufficient to cover all of your existing debts and then you use this loan to pay off all of your existing debts. You are then left with just one easy monthly repayment.

The advantages of this type of debt help are that there is no negative affect on your credit reference file and it allows you to make smaller repayments over a longer period. Thus reducing your outgoings.

The disadvantages are that you will ultimately end up paying more back at the end of the term but also debt consolidation loans are not right for everyone. A finance company has a legal responsibility to ensure that you can afford your monthly repayments. This is why you will see 'subject to status' on most loan adverts. Also for homeowners, the loan is likely to be secured loan against your property. Generally, there are no loans available in the UK for longer than 7 years that are not a secured loan but a secured loan can be as long as 30 years. This allows you to greatly reduce your monthly repayments.