Luckily, it’s simple to consolidate debt. The first step would be to calculate how much existing debt you currently have with your existing lenders. Once you have worked out the figure, you would then simply apply for a loan for that amount.

By taking out a consolidation loan and using the money to pay off existing debts, you are making the process of clearing existing debt simpler and more effective. This can help to relieve any built-up financial stress that you may be holding onto. It will come as a relief to know that once you reach the end of your new loan term, your debt will finally be clear.

You could end up paying less interest on your loan repayment. For instance, if you have three different outstanding debts to pay, each with a varying and high interest rates, you could immediately clear these debts off and focus on a single loan, this time with a smaller interest rate. As a result, you could end up saving money on interest repayments in the long run.

Consolidating your debt can help you to improve your credit score, as clearing your debts helps to reduce your credit utilisation rate. This could put you in a better position if you found that you needed to seek credit in the future.