What Is Debt Consolidation? A Guide to Taking Control of Your Finances in 2025
28th May 2025
If you’ve got a few different credit or loan repayments to manage each month, you might be looking for a simpler way to stay on top of them. That’s where debt consolidation could help. It’s a way to bring several types of borrowing into one place — with one loan, one monthly payment, and a clear end date.
Let’s take a closer look at how it works:
What Is Debt Consolidation?
Debt consolidation means taking out a new loan to repay a number of existing debts. These could include credit cards, store cards, personal loans, or overdrafts.
This new borrowing is called a loan for debt consolidation. It’s designed to help make things more straightforward to manage day to day.
If you’d like a simple guide on how debt consolidation works, StepChange offers clear, free advice at stepchange.org.
A simple example
Imagine you’re currently repaying:
- £1,200 on a credit card
- £600 from a buy now, pay later account
- £1,700 remaining on a personal loan
You could apply for a loan for debt consolidation to pay off those balances. After that, you would have one monthly repayment with a single lender.
This can make things easier to manage, but be sure to check whether it’ll cost you more in the long run and is the right financial decision for you.
Why think about it
You might be looking to feel more in control of your monthly outgoings. Or you might want to bring a few debts together so you only have to manage one repayment, at one time each month.
Here are a few reasons people consider consolidate debt loans:
- To simplify their monthly budgeting
- To set a clearer timeline for when their debt will be fully repaid
- To reduce the number of payments going to different lenders
National Debtline offers free tools that can help you explore whether debt consolidation might suit your current financial goals. Visit them at nationaldebtline.org.
What types of debt can be included?
Debt consolidation often includes:
- Credit card balances
- Personal loans
- Store cards
- Overdrafts
- Buy now, pay later accounts
Generally, secured debts like mortgages or car finance are not included in this type of loan. For full details about which debts can be consolidated, Citizens Advice has easy-to-follow guidance at citizensadvice.org.uk.
A few things to consider
Before applying for a consolidate debt loan, it’s worth taking a few minutes to think about:
- How much do you owe in total
- What your current repayments look like
- Whether you’d feel more confident managing one monthly payment
- If the new loan fits comfortably into your budget
There’s no need to make a quick decision. Taking time to consider your options can help you feel more confident about your next step.
What Happens to Your Credit Score?
Applying for a new loan might affect your credit score slightly at first. But over time, making repayments on time could help build your score.
Lenders usually look at how borrowing is managed, not just how much is owed. Keeping up with regular payments shows you’re in control. You can check your credit score for free using Experian.
How Oakbrook can support you
Oakbrook One is a dedicated brand for debt consolidation, created to support you with a more straightforward way to manage your borrowing.
Oakbrook One offers:
- One simple monthly repayment, making things easier to keep track of
- A choice in which debts you want to consolidate
- Clear, upfront terms with no hidden fees or confusing small print
- The potential for monthly savings to reduce debt over time, not just move it around
- Exceptional support, with a dedicated team to guide you from start to finish
You can find out more about Oakbrook One and how it works by visiting here.