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Debt consolidation personal loans can be a great way to take control of separate debts and save money through making them easier to repay. When applying, make sure you choose a loan with features that suits your circumstances and makes paying your debt easier.
Paying your debt off faster and saving money may be easier if you secure a debt consolidation loan with certain useful features. These might include:
However, these loans aren’t for everyone — you should compare fees, interest rates and loan features to make sure that securing a debt consolidation loan will save you money, not cost you more.
Shopping around for the right loan can save you thousands of dollars in interest and fees.
A debt consolidation loan is a way of unifying your debts, and simplifying your repayments while reducing your interest costs. Before applying with a lender, you need to have a close look at your new loan to make sure consolidating your debts will save you time and money.
A debt consolidation loan can be used to pay off other debt, like credit cards, other personal loans and store cards, and roll it into one easy-to-manage loan. This simplifies your debt, making it easier to repay.
If you are approved for a debt consolidation loan, you will receive cash in your account which will be used to repay your existing debts. In some cases, your new lender will contact your old lenders to settle the debts on your behalf.
Weighing up your options by comparing multiple personal loan offers from more than one lender is a simple way to ensure you’re getting the best deal for your personal circumstances. You can do that simply by using our smart-form. We’ll show you what lenders and what the best debt consolidation loan rates you’re eligible for.
To figure out whether a debt consolidation loan will save you money, it’s important to compare the total costs of both options — your existing loans, and your new loan.
It’s a good idea to work out the total cost of both keeping your current debts and refinancing with a debt consolidation loan — that way you’ll know for sure whether the change will save you money.
When comparing debt consolidation loans from multiple lenders, use the comparison rate to ensure you are accounting for all fees and potential charges.
The comparison rate expresses the true cost of a personal loan (Interest plus fees) as a simple percentage.
Variable fees are not included in the comparison rate - such as late-payment fees - so be sure to keep these in mind when comparing deals. The four types of fees you should be aware of when comparing lenders for a debt consolidation loan include:
Choosing a debt consolidation loan without any fees or penalties for early repayments may allow you to repay your loan earlier and save on interest, either by lowering your monthly repayments or keeping your payments at the same amount while reducing the term of your loan.
If you do not find any available offers to compare, you can work with a personal finance broker to assist in finding you a suitable deal and completing your application.
Brokers operate all across Australia — whether you need a debt consolidation loan in Adelaide, Newcastle, Sydney, Canberra, Brisbane, Melbourne, or Perth, you'll be able to find one who can help you assess a range of suitable options specific to your financial circumstances.
A debt consolidation loan could save you time and money, but they’re not right for everyone. Here are a few signs that you’d benefit from consolidating your debt:
Debt can be expensive, especially high-interest rate credit cards and store cards, so it’s usually best to pay it off as quickly as you can without causing yourself financial stress. Your debt consolidation loan can be a great tool to help you do this if you:
In a report published by RateCity, the company claims Australians could have collectively reduced national credit card debt by more than $1.5 billion last year had they been signed up to the credit cards with the lowest interest rates available.
The company also states that the current average Australian credit card rate is 17.30 per cent, 7.3% higher than the credit cards offering the lowest rate.
Want to know how much you could save by consolidating your existing credit card debt and ditching the high-interest-rate spending for good? Read on to find out.
In a study by Bankrate conducted in April 2020 of over 160,000 Australians, debt consolidation was the number one reason for a personal loan application.
Over one-third (38%) of applicants applied for a debt consolidation loan and, as non-bank lenders begin to offer fast approval alongside competitive interest rates, getting a good deal on a debt consolidation loan has never been easier.
Before you apply, you’ll need to check your existing credit card agreements to make sure there won’t be any penalties for repaying your debt in full and cancelling the card.
Credit card companies will often charge a fee just for having the card even if you don’t use it, so you’ll also want to make sure you cut up those cards as soon as you’re done!
Once you’ve applied for a debt consolidation loan and you’ve been granted approval, the lender may do one of two things:
Make sure you understand how the debt consolidation process will work at this stage, as you’ll want to repay and cancel your existing debts as quickly as possible to save on interest charges and make the most of your money.
If you’re only consolidating credit card debt, this will usually be a pretty simple and straightforward process. Simply repay your credit card debt, cancel the card, and you’re good to go!
However, if you’re also consolidating other debt, such as a car loan or another personal loan with a higher interest rate, you’ll want to double-check those early repayment fees to make sure it works for you financially.
The majority of lenders offer loans that are suitable for debt consolidation, and many offer products specifically for consolidating debt. You can apply for a debt consolidation loan in Australia if you are:
If you meet the basic eligibility for a personal loan, you will then need to compare lenders and assess their individual approval criteria.
To apply, you’ll need to gather all necessary documentation, and if you use our smart form and find a lender you want to apply with, you will be directed to the lender’s website and need to supply all documentation as you normally would when applying for a debt consolidation loan, which may include:
Once you’ve got your documents ready, you can apply with most lenders online. Generally, the lender will release the funds to you once you're approved, and you’ll have to pay off each of your existing debts yourself.
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.