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Debt consolidation loans Australia

Debt consolidation loans can help you save money on fees and interest by rolling multiple loans or credit card balances into one repayment. This could also help you budget and pay off your debt faster.

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By

Richard Whitten

Edited by

Rebecca Pike

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Name Interest Rate (p.a.) Comp. Rate (p.a.) Application Fee Monthly Fee Monthly Repayment
OurMoneyMarket Personal Loan
Finder award winnerFixed1 - 7 Years $2,001 - $75,000
Interest Rate (p.a.)
6.57%
to 18.99%
Comp. Rate (p.a.)
7.19%
to 21.78%
Application Fee
1.50% - 6%
min. $250
Monthly Fee
$0
Monthly Repayment
$627.42
Go to siteMore Info
NOW Finance No Fee Unsecured Personal Loan
Finder award winnerFixed18 Months - 7 Years $5,000 - $50,000
Interest Rate (p.a.)
6.75%
to 26.95%
Comp. Rate (p.a.)
6.75%
to 26.95%
Application Fee
$0
Monthly Fee
$0
Monthly Repayment
$615.26
Go to siteMore Info
Harmoney Unsecured Personal Loan
Finder award winnerFixed3 - 7 Years $2,000 - $70,000
Interest Rate (p.a.)
5.76%
to 24.03%
Comp. Rate (p.a.)
6.55%
to 24.98%
Application Fee
$275 - $575
Monthly Fee
$0
Monthly Repayment
$623.70
Go to siteMore Info
Latitude Variable Rate Personal Loan
Variable2 - 7 Years $5,000 - $70,000
Interest Rate (p.a.)
9.49%
to 29.99%
Comp. Rate (p.a.)
10.37%
to 30.69%
Application Fee
$0
Monthly Fee
$13
Monthly Repayment
$653.57
Go to siteMore Info
Special Finder offer: $395 establishment fee waived for approved personal loan applications submitted through Finder. Latitude may withdraw offer at any time. T&Cs apply.
ING Personal Loan
Finder award winnerFixed2 - 7 Years $5,000 - $60,000
Interest Rate (p.a.)
6.89%
to 18.99%
Comp. Rate (p.a.)
7.10%
to 19.23%
Application Fee
$150
Monthly Fee
$0
Monthly Repayment
$621.16
Go to siteMore Info
Pepper Money No Fee Unsecured Personal Loan
Finder award winnerFixed18 Months - 7 Years $5,000 - $50,000
Interest Rate (p.a.)
6.75%
to 26.95%
Comp. Rate (p.a.)
6.75%
to 26.95%
Application Fee
$0
Monthly Fee
$0
Monthly Repayment
$615.26
Go to siteMore Info
Citi Personal Loan Plus
Variable3 - 5 Years $2,000 - $55,000
Interest Rate (p.a.)
10.90%
Comp. Rate (p.a.)
11.19%
Application Fee
$199
Monthly Fee
$10
Monthly Repayment
$670.33
Go to siteMore Info
Special Offer: Monthly Fee of $10 waived for applications submitted before 30 June 2024.
NAB Personal Loan Unsecured Fixed
Fixed1 - 7 Years $5,000 - $55,000
Interest Rate (p.a.)
6.99%
to 20.49%
Comp. Rate (p.a.)
8.05%
to 21.49%
Application Fee
$250
Monthly Fee
$10
Monthly Repayment
$635.17
Go to siteMore Info
NAB Personal Loan Unsecured Variable Rate
Variable1 - 7 Years $5,000 - $55,000
Interest Rate (p.a.)
6.99%
to 20.49%
Comp. Rate (p.a.)
8.05%
to 21.49%
Application Fee
$250
Monthly Fee
$10
Monthly Repayment
$635.17
Go to siteMore Info
OurMoneyMarket Debt Consolidation Loan
Fixed1 - 7 Years $2,001 - $75,000
Interest Rate (p.a.)
6.57%
to 18.99%
Comp. Rate (p.a.)
7.19%
to 21.78%
Application Fee
1.50% - 6%
Monthly Fee
$0
Monthly Repayment
$627.42
Go to site
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What are debt consolidation loans?

A debt consolidation loan is generally just a personal loan. But instead of taking out money to cover a holiday, car or other purchase, you're using the money to pay off outstanding debts.

The goal with debt consolidation is to combine multiple debts, each with different interest rates and fees, into a single personal loan. Done correctly, you should save money by having a single, more manageable repayment. Not only does this mean more money in your pocket, but also makes budgeting much easier.

You need to make sure the new loan works out to be more cost-effective than keeping your existing debts separate.

What debts can I consolidate with a personal loan?

How to consolidate your debts in 5 simple steps

  1. Take stock of your existing debts. Work out how much you're paying each month in fees and repayments. Count up your total remaining debt amounts so you can work out how much to borrow.
  2. Compare personal loans and find a suitable loan. Look for a new loan with a lower interest rate and minimal fees.
  3. Crunch your costs. Before applying for a new loan, use a loan calculator and make sure the new repayments will be lower than what you're currently paying.
  4. Apply for the new personal loan. During the application make sure you select 'debt consolidation' as the purpose of the loan. This means the lender's assessment team knows that you will be paying off outstanding debts with the loan (these debts will show up in your credit report).
  5. Once approved, pay off your outstanding debts immediately. Make repayments on your new loan until it's paid off.

If you feel overwhelmed by your debt, you're not alone. According to Finder's Consumer Sentiment Tracker, the average Australian has $20,762 in personal debt. This includes car loan, personal loan, buy now pay later and credit card debt. Debt consolidation can make these debts easier to manage. Just make sure your consolidation loan works out cheaper in terms of fees and interest - monthly and over the life of the loan.

Richard Whitten

Richard Whitten
Money editor

Example: consolidating 3 debts into one personal loan

You have 3 debts you wish to consolidate. For the sake of simplicity we're assuming each of these debts has a 3-year term.

Debt typeRemaining debtInterest rateMonthly feesMonthly repayment (inc. fees)
Credit card$3,50020%$10$141
Car loan$9,0007%$12$290
Personal loan$4,00012%$10$143
Total$16,500$574

Over 3 years you would end up paying:

  • $16,500 in remaining debt
  • $3,764 in interest + fees
  • For a total of: $20,264

Now, if you took out a single $16,500 personal loan over 3 years with a $10 monthly fee and an interest rate of 10% you'd have repayments of $543 a month. This means you would end up paying:

  • $16,500 in remaining debt
  • $3,027 in interest + fees
  • For a total of: $19,527

This works out to be $30 a month cheaper and would save you $737 overall.

Tom Goodwin

Debt consolidation can be an extremely useful way to reduce your overall debt (particularly when it comes to interest repayments) while also enabling you to pay it off more quickly. However, it can mean that your credit rating takes a hit -- so if you're thinking about borrowing again in the near future, you'll need to weigh this up as a consideration.
— Tom Goodwin, Commercial Content Editor

Pros and cons of debt consolidation

Pros

  • Save money. By rolling all your debts into one account, you'll be paying one fee and one interest rate. This will likely reduce how much you're paying for fees and interest.
  • Simplify your debts. You will have one monthly repayment to make, one lender to deal with, one set of fees to track and one rate of interest to remember.
  • Could improve your credit score While taking out another loan may temporarily hurt your credit score, by consolidating your debt and then paying off the new loan you could see your credit score improved overall.

Cons

  • Confusing jargon. Watch out for certain "debt consolidation solutions" that are actually a Part 9 Debt Agreement. This is basically a form of bankruptcy and will have long term repercussions on your credit score.
  • High rates for bad credit borrowers. If you have a poor credit score, you're likely to be charged a higher interest rate.
  • Loan exit fees. Depending on how your existing loans are structured, you could have to pay exit fees if you switch loans as part of your debt consolidation

Is a debt consolidation loan the right option for me?

Whether or not a debt consolidation loan is the best option for you will depend entirely on your personal situation, and if you are really struggling you should consider calling the free National Debt Helpline for advice on 1800 007 007.

Generally speaking though, you should consider a debt consolidation loan if:

  • Your credit score has improved since you took out your existing debts
  • You have multiple debts from different lenders and are struggling with the various repayments
  • The lower interest rate on your new loan is enough to cover potential early repayment or break fees from your old loans

Another thing to consider is that, since this is a new loan, your loan term will be reset. This could be a good or a bad thing depending on your goals.

  • If your goal is to reduce your monthly repayments, this new and longer loan term will ease the strain on your day-to-day budget.
  • If your goal is to pay off your debt as soon as possible, the longer loan term could end up costing you more in the long run. However, if your new loan allows free extra repayments then you can use any extra cash to pay your loan off much sooner.

Does debt consolidation hurt my credit score?

In Australia, debt consolidation loans won't necessarily harm your credit score, but as with all credit this depends on a few things.

Any loan can damage your score if you apply for too many different loans at once or miss repayments. But meeting every payment on time and fully paying off your debt can improve your score.

Multiple debts, especially high interest debts, can also affect your score. So consolidating these debts and successfully meeting the payments of your new loan can be an overall benefit to your credit score.

You should also try to take steps to improve your credit score before applying for the loan. And don't apply for multiple loans at once.

Alternatives to debt consolidation

Talk to your lenders about hardship arrangements

If you're really struggling with debts, getting a new loan might only make matters worse. Borrowers in distress should consider talking to their current lenders before they start missing repayments.

Lenders and credit providers offer hardship assistance support for customers. This includes financial counselling, temporary repayment pauses or restructuring of your debts.

Talk to a financial counsellor

If you're struggling with debt and need help you can speak to a counsellor from the National Debt Helpline for free on 1800 007 007.

Refinance your existing debts

Your current lenders and card providers may have similar products with lower rates on offer. Refinancing a personal loan debt could save you money and be a suitable alternative to consolidating your debts.

Balance transfer credit cards

If you have multiple credit card debts you could consolidate them into a single card with a balance transfer credit card. These cards offer a 0% interest period which can help you get your debts under control. This period typically lasts between 12 and 34 months.

But if you don't repay your debt during the 0% interest period you'll be charged a high interest rate.

There are some card providers that even let you transfer personal loan debt to a balance transfer card. But you'll need a good credit score.

Home loan debt consolidation

If you have a home loan and you've been making regular repayments your lender may let you refinance the loan to consolidate other debts.

This might seem like an attractive prospect because your home loan rate will be lower than the rates on other debts. But home loans last for decades. So while it might only add a little to your repayments each month, you could be stretching your debts out for years or decades.

This will cost you a lot more in interest.

Can I get a debt consolidation loan with bad credit?

If you're struggling to manage multiple debts then you may already have a bad credit score. But borrowers with bad credit can still get debt consolidation loans.

Here are some tips:

  • Improve your credit score before applying. A small improvement to your credit score could make all the difference.
  • Get a risk-based personal loan. Many lenders offer risk-based pricing, which just means lower rates for good credit borrowers and higher rates for borrowers with lower scores.
  • Check eligibility requirements before applying. A rejected application harms your credit score, making it even harder to get your next loan approved. Lessen your chance of rejection by checking a lender's eligibility requirements before you apply.
  • Look at specialist bad credit lenders. There are lenders that specialise in lending to borrowers with poor credit histories.

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Frequently asked questions about debt consolidation loans

More guides on Finder

  • Salt and Lime Debt Consolidation Loan

    Looking to consolidate your debt? Salt and Lime offers fee-free loans, same-day funding, and the ability to earn discounts on your interest over the life of the loan. Apply today.

  • Insolvency vs bankruptcy

    Want to understand the differences between personal insolvency and bankruptcy, and what both of these terms mean for your financial future? Find out here.
  • What are the consequences of bankruptcy?

    This guide will take you through the consequences of bankruptcy so you can decide if it's the right option for you.

  • Debt negotiation

    What is debt negotiation and how can it help you? Find out here.

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47 Responses

    Default Gravatar
    AllenFebruary 28, 2019

    I have loans that are overdue and outstanding balances to pay. I have the capacity to repay a loan up to $60,000. Where can I find a lender that will consolidate debts that are already overdue and next to being referred to CRAA?

    Reply
      AvatarFinder
      JeniMarch 2, 2019Finder

      Hi Allen,

      Thank you for getting in touch with Finder.

      You may refer to the table above with a list of debt consolidation loans. Banks/lenders also check your capability to repay the loan so it would be helpful for you to contact your chosen bank/lender directly regarding your loan needs.

      You may also refer to our guide on bad credit debt consolidation.

      I hope this helps.

      Thank you and have a wonderful day!

      Cheers,
      Jeni

      Reply
    Default Gravatar
    NicoleSeptember 7, 2018

    I have been approved for a consolidation loan but the interest is 18% over 5yrs. Short term it will be great to have 1 repayment but over the 5yrs the amount owing is crazy. Can I shop around for a better interest rate? Will it effect me in any way ie.credit checking?

    Reply
      AvatarFinder
      JohnSeptember 7, 2018Finder

      Hi Nicole,

      Thank you for leaving a question.

      Yes, this is definitely an options available for you. You may still shop around for better deals but please note that each time you apply hits your credit score since an inquiry is being made. It is best to make sure that you want the deal before you apply for it. This ensures that you make as less inquiries on your credit score as possible. Hope this helps!

      Cheers,
      Reggie

      Reply
    Default Gravatar
    NicoleSeptember 7, 2018

    I’ve been offered a debt consolidation loan but the interest is 17%. Do I have to keep applying to find a lender with lower rate? If I do start shopping for a better offer will it effect me in any way ie.credit checking?

    Reply
      AvatarFinder
      JohnSeptember 7, 2018Finder

      Hi Nicole,

      Thank you for leaving a question.

      You do not need to keep on applying for a better deal but instead you may ask around on what other lenders could offer. The only time your credit score is when you are already applying for the loan. Speak with lender representatives and see what they could offer, if you do find a better deal then ask what the requirements are and see if you qualify before you apply for the loan. Hope this helps!

      Cheers,
      Reggie

      Reply
    Default Gravatar
    JODIEApril 19, 2018

    I have $30,000 to consolidate. Looking for a way to consolidate with a fixed interest rate between 9% – 12%

    Reply
      Default Gravatar
      NikkiApril 19, 2018

      Hi Jodie,

      Thanks for your message and for visiting Finder.

      The NOW Finance unsecured personal loan and the NAB unsecured loan has a fixed interest rate from 9-12%

      Alternatively, The information above shows you multiple providers for debt consolidation. Please use our comparison table to help narrow down your options. Simply, enter the amount to be consolidated and sort the table based on interest rate p.a. to show you the providers within a 9%-12% fixed interest rate.

      Once you have chosen a particular lender, you may then click on the “Go to site” button and you will be redirected to the lender’s website where you can proceed with your loan application or get in touch with their representatives for further assistance. Before applying, please ensure that you meet all the eligibility criteria and read through the details of the needed requirements as well as the relevant Product Disclosure Statements/Terms and Conditions when comparing your options before making a decision on whether it is right for you. You can also contact the provider if you have specific questions.

      Hope this helps! Feel free to message us anytime should you have further questions.

      Cheers,
      Nikki

      Reply
    Default Gravatar
    LouiseJanuary 24, 2018

    I need to consolidate some loans and credit cards to the value of $97,000 – my bank only offers up to $50,000 – what do you suggest?

    Reply
      AvatarFinder
      JonathanFebruary 21, 2018Finder

      Hi Louise,

      If your bank only offers up to $50,000 it could be better to consider applying for a new balance transfer offer with a higher credit limit or a personal loan for debt consolidation.

      You may open the links above to compare your options. These pages have a comparison table you can use to see which provider suits you. When you are ready, you may then click on the “Go to site” button and you will be redirected to the lender’s website where you can proceed with the application or get in touch with their representatives for further inquiries you may have.

      Before applying, please ensure that you meet all the eligibility criteria and read through the details of the needed requirements as well as the relevant Product Disclosure Statements/Terms and Conditions when comparing your options before making a decision on whether it is right for you. You can also contact the provider if you have specific questions.

      Thanks,

      Jonathan

      Reply
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