All Debt Solutions
Debt Consolidation Loan vs IVA
Debt consolidation involves taking out a single loan to pay off multiple existing debts, leaving you with one monthly payment. Unlike an IVA, you still repay the full amount (plus interest on the new loan).
How Debt Consolidation Loan Works
- 1You apply for a consolidation loan from a bank or lender
- 2If approved, the loan pays off your existing debts
- 3You then make one monthly payment on the new loan
- 4Interest rates depend on your credit score and circumstances
- 5Secured loans may use your home as collateral
Consolidation Advantages
- Simplifies payments into one monthly amount
- May reduce total monthly outgoings
- Not an insolvency solution - less stigma
- Can be arranged quickly
- Fixed end date if on a fixed-rate loan
Consolidation Disadvantages
- No debt write-off - full repayment plus interest
- May pay more overall if term is longer
- Secured loans risk your home
- Harder to get with poor credit
- Doesn't address underlying spending issues
IVA vs Debt Consolidation Loan - Side by Side
| Feature | IVA | Debt Consolidation Loan |
|---|---|---|
| Debt write-off | Up to 85% written off | No write-off - full repayment |
| Legal protection | Yes - creditors legally bound | No legal protection |
| Credit impact | 6 years on credit file | Less impact if repaid on time |
| Total repayment | Pay only what you can afford | Full debt plus interest |
| Risk to home | Home usually protected | Secured loans risk your home |
| Simplicity | Formal legal process | Simple loan application |
Debt Consolidation Loan May Suit You If...
- Those with a good credit score who can get favourable rates
- People who can afford to repay in full
- Those with manageable debt levels
An IVA May Be Better If...
- People who can't afford to repay the full amount
- Those with poor credit scores
- Anyone struggling with unmanageable debt
Need Help Deciding?
Get free, confidential advice from a qualified professional to find the best solution for your situation.
Do You Qualify?* This information is for general guidance only and does not constitute financial advice. An IVA is a formal insolvency solution - fees apply and your credit rating will be affected.