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Debt consolidation loans in Australia

Written by

Shaun McGowan

Are you feeling overwhelmed by debt?

If you’re starting to lose track, debt consolidation could be the answer.

Australia's Money Matchmaker matching you with your best loans across multiple lenders
Debt consolidation lets you take out one loan to repay all your existing debts at once; pay off the car, cut up the cards, and cancel the overdraft.

Consolidating debt benefits

Consolidating your debts should make them:

  • Easier to manage; and/or
  • Cheaper to repay

Of course, debt consolidation isn’t for everyone.

Below, we’ll cover off all the things to look out for and keep in mind so you can simplify your debts.

The two ways to use debt consolidation loans

The first way

Let’s say you’ve got five different debts and...

You’re making five different payments at various times of the week or month.

Add rent, bills, streaming subscriptions, direct debits and other ongoing expenses and...

It’s very easy to feel overwhelmed and lose track of where your money is going.

Debt consolidation allows to take all those repayment amounts and different dates and merge them into a single loan.

One amount. One repayment.

  • So instead of paying: $45.66, $59.14, $104.94 and $130.26 on the 3rd, 9th, 15th, and 28th of the month, all charging different rates of interest and fees for missing payments...
  • You could simply pay: $340 (or less!) once a month. On the day of your choosing, with a single interest rate.
Debt consolidation with Money Matchmaker

The two ways to use debt consolidation loans

The second way

Use debt consolidation to extend the term of your repayments.

But keep in mind, this may not save you money.

The longer you take to pay off your loan, the more you’ll end up paying in interest.

However, it could allow you to free up cash or simply breathe easier in the short term...

Because extending your term means your repayments will be lower.

And, if you decide you are in a better place a little way down the road, you can always think about:

  • Refinancing your loan to shorten your term at a better rate, or
  • Making additional payments (if you can) to settle your debt sooner.
Consolidate your debt into one loan with Money Matchmaker
Australia's Money Matchmaker matching you with your best loans across multiple lenders
Debt consolidation is like spring cleaning for your finances, cutting out the waste and making everything tidier. Finance minimalism even!

Compare your best debt consolidation rates and offers


Joshua's debt consolidation loan

Joshua used a debt consolidation loan to get a handle on his debts. His debts were:

  • Car repair bill
  • Dentist bill
  • Course fees
  • Credit card

He was finding it harding it hard to ensure he still had money on each of the different payment dates. Joshua chose a debt consolidation loan with:

  • Weekly instalments on a day he chose, so it matched when he got paid
  • Fixed interest rate of 11.35%, which was less than his other existing interest rates
  • Loan term of 2 years, so his payments each week were manageable and he still had money left from his pay check
  • No establishment or monthly fees, so he wasn't paying more than he had to

What to look for in debt consolidation loans

So, now that you want to consolidate your debt, you’ll want to keep three important things in mind when comparing or choosing a loan:

  • Debt consolidation loan rates — The lower the better. Low interest rates mean lower total costs and lower repayments overall.
  • No ongoing fees — Fees are awful, and you shouldn’t pay them. Credit cards are notorious for this; find a new loan with no fees and save money instantly.
  • Simplicity — Find a loan that lets you choose your frequency of repayment and date to better manage your debts, or one with no fees if you want to repay your loan faster.

Find the lowest rate debt consolidation loan you can with no fees.

Australia's Money Matchmaker matching you with your best loans across multiple lenders
Money Tip: Find a debt consolidation loan with a lower interest than your existing loans and you’ll save money by paying less interest over time.

Comparing debt consolidation loans and lenders

When comparing debt consolidation loans and rates from multiple lenders, use a comparison rate to ensure you are accounting for all costs.

The comparison rate expresses the true cost of a loan (Interest plus fees) as a simple percentage.

The four types of fees you should be aware of when comparing lenders for a debt consolidation loan include:

  • Upfront costs - establishment fees and application fees (often negotiable)
  • Ongoing fees - annual fees and monthly fees (avoidable)
  • Late payment fees - charged if you miss a payment (very avoidable!)
  • Extra repayment fees - charged if you make an extra payment (ouch!)

Upfront and Ongoing fees are included in the comparison rate. However, variable fees - such as late-payment fees - are not, so be sure to keep these in mind when comparing deals.

If you can’t find any loans to compare, a personal finance broker can assist in finding you a suitable deal and completing your application.

Understand what a comparison rate is showing you

The right debt consolidation loan can save you $1,000s


What lenders are looking for

Lenders love boring, or should we say, consistency!

They love it if you've had the same job forever and have been at the same house since you first left home.

Here's an example of how your employment history can influence your approval.

employment history applicant

How lenders view credit history

Here is how your credit history can influence your ability to be approved.

Check your credit score for free.

credit history applicant
Australia's Money Matchmaker matching you with your best loans across multiple lenders
Money Tip: It may be a good idea to set up your loan repayments so that they fall directly after your payday — that way you’ll always have money in the bank to pay them.

How to benefit from debt consolidation

Debt can be expensive, financially and mentally.

Debt consolidation can be a great tool if you:

  • Set a budget — Create a realistic budget to manage your repayments and keep a close eye on your spending to make sure you can stick to it.
  • Make extra repayments — Making extra repayments is a great way to pay your loan off faster and reduce the total amount of interest you pay.
  • Choose the right loan and shop aroundShop around to find lower interest rates, fees and a better deal.
  • Avoid getting back into debt — This may be a good time to close those overdrafts and cut up your credit cards.

You can also speak to a financial adviser before committing to a debt consolidation loan.

These financial experts can assess your current situation and advise you on what will or won’t work in your current circumstances, and also help you find a great loan.

How does consolidating debt actually work?

Once you’ve applied for a debt consolidation loan and you’ve been granted approval, the lender may do one of two things:

  • Deposit the cash in your account to repay your existing debts yourself
  • Contact your previous lenders to settle the existing debt on your behalf

Either way, you’ll want to repay and cancel your existing debts as quickly as possible to save on interest charges.

If you’re only consolidating credit card debt, simply repay your credit card debt, cancel the card, and you’re good to go!

Who is eligible?

You can apply for a debt consolidation loan in Australia if you are:

  • Over the age of 18; and
  • An Australian citizen or permanent resident; and
  • Employed or have a regular source of income over $25,000 per year

If you meet the basic eligibility for a debt consolidation loan, you will then need to compare lenders and assess their individual approval criteria.

How to qualify for a loan in Australia

What happens once you get approved?

Most lenders will make the consolidating of your debt super easy:

  • They'll organise the consolidation of your debts
  • Pay your nominated credit providers directly
  • Close off your nominated old accounts to avoid further debt ad fees

Here are the most popular questions people are asking about debt consolidation loans

You may be able to get a debt consolidation loan if you have bad credit, but your lender’s credit policies will apply. Generally, non-bank and specialist lenders have relaxed credit policies, so your chances may be better if you apply with them.

Not usually. Provided you meet the lender’s credit criteria, your debt consolidation loan should have a similar interest rate to comparable personal loan products.

Yes, most lenders offer unsecured debt consolidation loans. These may have higher interest rates than secured loans but won’t require you to use your assets as security.

If you manage your debt consolidation loan well, it shouldn’t hurt your credit score. In fact, it could help improve it — make repayments on time every time, reduce your total debt, and avoid submitting multiple applications.

Every case is unique and the answer to this question will depend on the circumstances of your home loan and debts. However, because home loans generally have longer terms than other forms of household debt, consolidating other debts into your mortgage could end up costing you more in the long run.

Can you help me get a consolidation loan anywhere in Australia?

With most debt consolidation lenders, they operate throughout the country. Whilst most are located in the major capital cities like Perth, Sydney, Melbourne, Brisbane, Adelaide and Hobart, they often have local representatives across the smaller cities as well.

All the lenders we work with have Australian based teams. So rest assured, when arranging your loan you'll be working with a lender in Australia.


The right debt consolidation loan can save you $1,000s


About the Author

Shaun McGowan from



Shaun McGowan

Shaun is the founder of and is determined to help people pay as little as possible for financial products. Through education and building world class technology. Previously Shaun co-founded and Lend.

Information about borrowing rates The rate advertised are comparison rates. See below for further information about comparison rates. Using our lender SocietyOne as an example Tier 1 borrowers will receive an interest rate between 5.95% - 10.49% p.a. (comparison rate 5.95% - 12.83% p.a.). Tier 2 borrowers will receive an interest rate between 9.99% -12.19% p.a. (comparison rate 12.05% - 15.03% p.a.). Tier 3 borrowers will receive an interest rate between 11.99% - 15.99% p.a. (comparison rate 14.37% - 18.62% p.a.). Tier 4 borrowers will receive an interest rate between 14.99% - 19.99% p.a. (comparison rate 18.41% - 21.70% p.a.). The maximum annual percentage rate (APR) interest rate is 19.99% p.a. (comparison rate 21.70% p.a.). An establishment fee applies for most borrowers. Personal loan example: for a borrower with excellent credit (Tier 1 borrower), a loan of $10,000 over a 3 year term, with an interest rate of 8.99% p.a. (comparison rate 12.32% p.a.) and a $495 establishment fee, the fortnightly repayment would be $154 and the total cost over the life of the loan (including the establishment fee) would be $12,013. SocietyOne personal loans are available for terms of 2, 3 and 5 years. Minimum loan term repayment period is 2 years, maximum loan term repayment period is 5 years.

*Information about comparison rates Comparison rates are designed to allow borrowers to understand the true cost of a loan by taking into account fees and charges, the loan amount and the term of the loan. The comparison rate is based on an unsecured fixed rate personal loan of $10,000 over 3 years. WARNING: Comparison rates are true only for the examples provided and may not include all fees and charges. Different terms, fees or loan amounts might result in a different comparison rate.