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If you're looking for a better way to manage the money you owe, you're not alone. Research conducted by YouGov in January 2020 reveals that 61% of working Australians are in debt (outside of home loans) and 40% have considered debt consolidation1.
Debt consolidation is an option when you have multiple or high-interest debts (loans, credit cards, etc.) and you want to reduce the interest and fees you're paying. This guide will take you through your options to consolidate your debts – including options for if you have bad credit. Keep these three things in mind as you're reading:
Debt consolidation involves taking out another credit account (personal loan, credit card or home equity loan) that combines your existing credit accounts into one. This helps to reduce the amount of fees and interest you're paying.
The best way to consolidate your debt will depend on how much you owe, what type of debt it is, your financial situation and your eligibility for each option. The sections below will guide you through consolidating debt.
Debt Consolidation Personal Loan | Balance Transfer Credit Card | Mortgage Refinancing | |
---|---|---|---|
Summary | Take out a new loan with a lower rate and move the debt across. | Transfer loan or credit card debt to a new card with a 0% interest rate. | Use the equity in your home as a line of credit to pay off your debt. |
Cost | Pay around 12% p.a. up to 7 years with no or low fees | Pay 0% for about 2 years with no or low fees | Pay about 5% for as long as you need with higher fees |
Suited for debt amounts | $8000 to $50,000 | $500 to $8,000 | $40,000 + |
Good for credit card debt? | 🟡 | 🟢 | 🔴 |
Good for personal loan debt? | 🟢 | 🟡 | 🟠 |
Good for both card and loan debt? | 🟢 | 🟢 | 🟠 |
While your options are much more limited when you have bad credit, debt consolidation is still possible. When entering into bad credit debt consolidation, it may involve entering into a Part 9 Debt Agreement, which is a form of bankruptcy. However, there are other options available; it just may involve a higher interest rate being applied to your loan to offset the risk you represent as a bad credit borrower.
When someone applies for a payday loan, the lender needs to take certain steps to determine whether or not they can afford the repayments to ensure that they are in line with ASIC's requirements. The lender needs to determine if the applicant:
For applicants that the above mentioned applies to, the lender has to take further steps to ensure that they will be able to repay the loan they are applying for. The lender does this by asking further questions about the applicants' financial situation. Essentially, if someone is trying to consolidate payday loans with another payday loan, they may have difficulty qualifying.
By consolidating your debt and choosing a product with a lower rate and fees, you could save $5,699. Now, all of this is dependent on your risk profile and eligibility, so make sure you compare your options, read the details and know exactly what you're signing up for.
Even though you may have bad debts, you also still have rights. There are laws that control what debt collectors can and cannot do.
If your application is rejected, then you should wait to apply again. Generally, waiting between three and six months to apply with another provider will be a lower risk than applying straight away. If you have serious concerns about your debt, you have Part 9 Debt Agreements (a form of bankruptcy) as a last resort.
In the event that a provider rejects your application for credit, bear in mind that not all is lost. Before you apply for credit, there are a few things you can do to improve your chances of being approved. For example, you can start by going through your credit report to ensure you have a good credit score. If you're concerned about your application, you could also work on reducing your debt for a period of time so you don't have to apply for as high a limit and then work on reducing debt with a budget.
Applying with your current bank has some advantages, but you should still compare the options available to you before you apply. If you have a few negative listings on your credit file and have a strong past relationship with your bank, you may have a better chance of being approved with them than with another lender. This is, of course, if your account has been kept in good standing. It still helps to compare the options you may be eligible for so you're aware of the debt consolidation possibilities in the market.
As we've outlined above, if you have equity in your home, you can consider adding your debt to your home loan by refinancing.
There are a few considerations before doing this and it may very well not be the most sensible option.
First off, while the interest rate might be lower, the debt will likely be spread out over a much longer period as home loans have longer terms than standard personal loans. The costs of refinancing should also factor into your decision.
If you are taking out a traditional debt consolidation loan, then you don't have to change your budget, although this can help you get out of debt sooner. A debt consolidation loan should offer a reduction in the amount you pay in interest, which in turn reduces your monthly repayments.
If there are no fees for making extra repayments, you could put the money you save towards your loan to help pay down your debt more quickly.
You might also want to review your current budget and see if there's any ongoing expenditure you can cut back on so you can put more towards your loan. If you choose to enter a debt agreement, there may be budget and spending restrictions depending on the nature of your agreement.
A debt consolidation loan is a type of personal loan that allows you to combine your current debts such as loans and credit cards into one. These loans can help reduce the amount you're paying in interest and fees and also make your debt easier to manage with one simple repayment.
A debt agreement, on the other hand, is a binding agreement that is an actual act of bankruptcy. It will be listed on your credit file and affect your ability to access credit later on.
Debt agreements are serious contracts to consider and the decision shouldn't be taken lightly. You should only consider this option when you find your debt unmanageable but don't want to enter into bankruptcy – you will agree to pay your debtors a certain amount of money that you can afford.
Debt anxiety is a common concern especially if you're finding your debt overwhelming or unmanageable. If you're unsure whether a debt consolidation loan is right for you or you want some advice on your personal situation, you can get in contact with a free financial counsellor on 1800 007 007.
There are free credit and debt services available in every state and they can help you decide your best course of action.
1Debt fret - YouGov study commissioned by ING.
Want to understand the differences between personal insolvency and bankruptcy, and what both of these terms mean for your financial future? Find out here.
Bankruptcy doesn't clear all of your debts – here is a guide to which debts aren't eligible to be covered by bankruptcy.
This guide will take you through the consequences of bankruptcy so you can decide if it's the right option for you.
Need a solution for your debt? Find out what options you have in this guide.
What is debt negotiation and how can it help you? Find out here.
It doesn't matter how long you've been in debt or how much debt you have, there are strategies you can use to free yourself from any kind of debt trap. Use our guide to see how you can set yourself on the road to regaining financial control, and getting out of debt once and for all.
The ultimate guide to the strategies available to help you reduce debt and get your finances back on track.
Debt can creep up on you, so what do you do when it hits $50,000? We talk to financial experts Noel Whittaker and Robert Dawson about the best strategies to pay down substantial debt.
Consolidate your debts into one account and repay your balance at a low interest rate with a personal loan or balance transfer credit card with ANZ.
Want to consolidate debt of around $50000
Can someone help us
Hi Cheryl,
Thank you for reaching out to finder.
It looks like we are on the correct page to check on a panel of lenders who could assist you on your query.You may choose, depending on the debt that you have on the three tabs located on the page for Debt consolidation loans, Balance transfer credit cards for personal loans or Home Equity refinance. Kindly review and compare your options on the table displaying the available providers. Once you have chosen a particular provider, you may then click on the “Go to site” button and you will be redirected to the provider’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.Hope this helps!
Cheers,
Reggie
Need help have bad credit and currently owe $50,000 in personal loans and credit cards. Need to consolidate loans into one payment not sure how this is done
Hi Darren,
Thanks for reaching out to Finder.
Even if you have bad credit, it’s not completely impossible to find lenders who can help you consolidate your debts.
You may compare lenders offering bad credit debt consolidation loans. You can click on the “Go to site” button of your preferred lender to be redirected to their website where you can learn more about their loan offer and start your loan application.
Before applying for any loan, please review the eligibility criteria and read through the terms and conditions to see if it best suits your needs.
I hope this helps.
Cheers,
Charisse
I am looking someone to help me get the low rate personal loan to pay off my credit cards and the money I borrowed from friends. So that I can have one fix repayment coming out every fortnight.
Hello Neil,
Thanks for reaching out to Finder.
This page provides a list of lenders that can help you consolidate your existing debt. You can use our comparison table above to help you find the right lender. While we don’t provide a specific product recommendation, you can use the table to narrow down your options. Simply, enter the amount you need to pay off your existing card and your friend followed by your repayment term then press “Calculate”.
You can click the name of the lender or the “More info” link to be redirected to our review page and learn more about the lender’s loan offer, rates, and requirements as well as the pros and cons of using their loan service. 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.
Cheers,
Gru
Hi Gru,
Thank you for reply. I understand these options. But I was looking for someone who helps me apply for loan. I don’t know which financial institution to choose to get guaranteed loan. Also I have few personal questions that are related to my current financial situation.
Is there anyone I can talk too?
Hello Neil,
Thanks for reaching out to Finder.
Finding a personal loan can indeed take a lot of time, effort, and stress.
If you prefer to speak to someone who can take your personal circumstance into account and offer you a range of borrowing options, you may consider using a personal loan broker. Personal loan brokers are handy for those with complicated situations or poor credit scores, who are typically rejected by traditional lenders.
Please also feel free to view these pages to guide you and check if something would be suitable for you:
To increase your chances of approval, 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.
Cheers,
Gru
I am trying to find out how I go about consolidating my credit card and personal loans into one payment but not sure how to go about it
Hi Kerrie,
Thank you for your inquiry.
It’s important to consider your options carefully. How much debt do you have and does it include loans and credit card accounts? Make sure you will be able to bring across all your accounts to consolidate. Please check this page for your available option.
I hope this information has helped.
Cheers,
Harold
recently discharged bankrupt 2 months ago.have 3 cash advances money3 total 520 p/week need a car and consolidate debt, 7000 owing on loans need about 8000 for car earning 1300 p/w permanent employment.
Hi Glenn,
Thanks for your question.
Please check the list of bankrupt loans featured on our website so you can explore what options might be available for you. Please review the criteria, details of the loan product and contact the lender directly to discuss your loan options and eligibility.
Cheers,
May
Hi Glenn, what is in page link?
Hello Rickky!
Thanks for your comment! :)
It is the list of lenders who can offer loans for bankrupts.
Hope this clarifies.
Cheers,
Jonathan
Hi how do i get help to roll all my bills into one det iv applied with two other people who cold not help me out if you can please help thank you
Hi Henrietta,
Your debt consolidation loan options are listed on the page above, but you may not have been approved because you did not meet the lender’s eligibility criteria or that you asked for a loan amount that the lender determined you could not afford. Now you have two recent credit enquiries on your file it will affect your chances of being approved. You may want to consider waiting a few months to apply again, or call the lender directly to discuss your eligibility for the loan. Criteria is also listed on each finder review page.
Hope this helps,
Elizabeth
Hi Harrietta,
Thanks for your comment. Finder is not a lender so we can’t consolidate your debts, rather provide general information on the process.
Each company considers your debt consolidation needs differently and will rely on a range of factors when considering your application.
If you want, you can read our guide on personal loan rejection to find more information.
I am trying to apply for a house.they declined me and said is because of 3 account which I fine it very hard to pay it off but I made arrangement.I pay certain amount on each account but still they declaim my application. Please help me how to get approval I really want a house
Hi Tinyiko,
Thanks for your enquiry, and sorry to hear about your situation.
You might be interested to read our tips about how to get approved for a home loan with bad credit. You can also compare the range of specialist lenders that may be more likely to review your application given that you have some enquiries against your credit file.
Keep in mind that while debt consolidation can make it easier to manage your finances, you may also have to pay a higher interest rate over the life of the loan.
I recommend getting in touch with a licensed mortgage broker A broker can help you understand your financial position and they can leverage their panel of networks to find a lender that’s more inclined to review your application.
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.
All the best,
Belinda
Can i get a loan or credit card to pay off debt so i only have 1 loan or credit card repayment? I’m falling more and more behind in payments and just want the debt settled as quick as possible.
Thank you!
Hi CK,
Thanks for your question.
There are a few debt consolidation loans you can consider. To check the eligibility and the details of the loan, select the title of the loan in the table. You can also apply by clicking ‘Go to Site’ once you have found the loan you want to apply for. If you want to balance transfer your personal loan debt, you can compare your options from credit cards that allow balance transfers from a personal loan. 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.
I hope this has helped.
Thanks,
Elizabeth
I would like to know the names of some lenders who help people with debt consolidation loans when they have bad credit. Thanks
Hi Kirsty,
Thanks for your question.
You may refer to our debt consolidation loans for borrowers with bad credit history. You can select the “Go to Site” button of your preferred lender to proceed with your application. You can also contact the lender directly if you have specific questions about the loan. Please ensure to read through the relevant product disclosure statement and terms and conditions of the loan.
I hope this will help.
Thanks,
Elizabeth
Hi there,
Its really confusing me, but could anyone give me an advise?
The thing is that my Mom has a credit balance of $20000 and so does my dad. Which adds up to $40,000.
We don’t have a house, we are renting. But we want to take a home loan to offset it and then buy a house. But we are really lost. We don’t know any solution.
Hi Akki,
Thanks for your question.
If your parents are currently in debt, you will find that your options are somewhat limited as lenders are not prepared to take on this extra debt.
If you find that none of these loans are suitable for your situation, there is always the option of speaking to a home loan broker. They will be able to help you further in narrowing down a suitable home loan option for you.
Cheers,
Shirley