Personal Loans for Debt Consolidation

What your creditors don't want you to know about debt consolidation loans.

Debt consolidation allows you to combine all your loans into one. Essentially, it can give you a way to reduce your interest rates and fees, thereby giving you a way to get yourself out of debt. If you choose to consolidate your debt, you'll have one loan repayment to worry about rather than several. A debt consolidation loan offers reduced interest and fees, but it's important to also consider refinancing costs and early payout fees from your existing loans to see if the cost of consolidating is more than the money you'll save.

How can a debt consolidation loan work for me?

Debt consolidation refers to the process of combining multiple loans into a single one, with people normally take this road to minimise their ongoing expenditure and make their credit more manageable. For example, if you owe $2,000 on your credit card, $2,000 on a store card, and $6,000 on a personal loan, you can look for a debt consolidation loan of $10,000. Apart from leaving you with a single repayment, you no longer have to deal with different interest rates and multiple fees, so it can also lead to savings in this way. There are two types of debt consolidation: good credit debt consolidation and bad credit debt consolidation. The former involves you taking out an unsecured personal loan or balance transfer credit card to consolidate multiple credit accounts, while the latter involves you taking out a debt agreement, which is a form of bankruptcy.

Rates last updated October 20th, 2018
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When should I think about debt consolidation?

While debt consolidation is a good option for some, it may not be right for everyone. So, when should you be considering debt consolidation?

  • If you have trouble keeping up with monthly repayments. In this case, debt consolidation can reduce the number of repayments and simplify the management of your debt. This is especially if your cards you are nearing the credit limits of your cards or you've already reached your limit.
  • If you have a low-interest credit card with available credit. Then a balance transfer credit card might be an option to consider. These cards let you pay 0% p.a. for a set period for balances transferred. Debt consolidation loans might need to be considered for larger credit card debts or if you want to consolidate a range of different credit types.
  • If you have equity in your home. In this scenario, the interest rate your home loan attracts would be considerably lower than that of a personal loan or credit card, so debt consolidation could be a viable option for you to consider.
  • If you have bad credit and a large amount of debt. You're able to consider a debt consolidation loan in order to take back control of your finances. There are some brands who specialise in bad credit debt consolidation loans, although keep in mind that some of these might be debt agreements which are a form of bankruptcy.

What debt can I consolidate?

It's possible to consolidate a variety of debts using one of these loans. Common types of debt that are consolidated include the following:

  • Personal loans. This is a common type of debt that is consolidated. You can take out a debt consolidation loan to consolidate two or more separate personal loans, a personal loan and another type of credit, or even refinance a personal loan to one with a lower rate and/or fees.
  • Credit cards. If you have a large outstanding balance due on your credit card then you can consider taking out a personal loan to pay it off. This is often an option when you want to consolidate your credit card as well as another debt or if you aren't a candidate for a balance transfer.
  • Store/charge cards. Balances can easily increase on store and charge cards as they do on credit cards, making them another type of debt people choose to consolidate.
  • Other credit accounts. Depending on the loan you take out, you may also be able to consolidate other types of debt. This can include private loans, debts to utility companies (i.e. electricity, phone, Foxtel), etc. See what the credit provider will allow you to consolidate.

What options do I have for debt consolidation?

When you choose to consolidate your debts you have three basic options to choose from, all of which are outlined below:

  • Pay off your credit card debt when a balance transfer isn't an option If you have multiple credit cards, you can consider transferring balances from high interest cards to a different card that attracts lower interest rates. If you aren't eligible for one of these cards or aren't able to transfer the balance within the promotional period, you can consider a debt consolidation loan. You'll have longer to pay off the debt (up to seven years) and can usually fix your rate, so you'll know how much your repayments will be each month.
  • Refinance or pay out your current personal loan You can use a personal loan to pay off existing debts, but since this is an unsecured line of credit you might want to look for a competitive fixed interest rate. You’ll need to have a good credit rating to be approved for a personal loan.
  • Rolling debts into your home equity A home equity loan is a secured line of credit that uses the equity in your house as collateral. Getting a home equity consolidation loan can make sense if it relieves your debt considerably, or if it leads to savings in the form of lower interest rates and costs. Keep in mind that while the interest rates for these loans are often quite low, the fees can be considerable and you're also risking your home should you default on your repayments. Make sure you compare your debt consolidation loan options to find the best one for you.

How can I work out what my best option is?

If you plan on paying off your debts ahead of time and save in the form of interest paid, debt consolidation can be a good idea — but how do you work out if it's a good option for you? One way is a debt consolidation calculator. These calculators put the tools in your hands to work out what debt consolidation option is the best avenue for you to go down. Simply input the amount you want to consolidate, the frequency of your repayments and the applicable interest rates and the calculator will show you how much you'll need to pay each month.


Collin was a freelance photographer who was forced to take three months off owing to an accident with a snake on a photo shoot. As a freelancer he had no leave or other benefits to rely on. During this six-month period, his family’s debt increased considerably as they could only rely on his wife's salary, who worked part-time. He defaulted on his car and home repayments as they were drawing on their savings to pay for day-to-day expenses. The debts started piling up and by the time he returned to work they were only barely starting to repay what they owed. After six months, Collin owed a total of $254,000, his outgoing repayments stood at $3,500 per month and he risked losing his home and car. He and his wife's joint income was not enough to cover it all. After working with a debt consolidation company he refinanced all his debts into a single loan and his monthly repayment came down to $2,438, which was a reduction of more than $1,000. They worked on a budget and cut down on their expenses so they could pay off their debt as quickly as possible.

But I have bad credit, can I still consolidate my debt?

Bad credit can strike at any time. Whether you lose your job or miss a few repayments due to illness, debt consolidation for bad credit borrowers is still possible. If you find that your repayments are spiralling out of control, debt consolidation could be for you. With the help of our guide, you could potentially get your finances back on track. Consolidating your debt with bad credit

Debt consolidation loans comparison

What to consider when consolidating debt


Ensure that you'll be able to meet the requirements for a debt consolidation loan before you apply. Take into account the additional fees and charges you might have to pay, especially if you have existing fixed rate loans. Choose the term of the new loan with care, because while longer terms could result in lower repayments, you could end up paying more in the form of interest. Consolidating debts can also lead to more available credit on your hands, which could, in turn, result in more debt.

Comparing costs, interest rates and loan term

Before signing on the dotted line it's crucial that you know exactly how much you have to pay. This includes the interest rates, fees and costs. If this is not lower than what you’re paying on your existing loans, opting for a debt consolidation loan might not be a good idea after all. This process requires that you add up all the costs of your existing loans, including exit costs, and compare these with the costs linked to getting a new loan. Paying attention to the loan term is also important because if you opt to pay a short-term loan with a high interest rate over a longer term through a lower interest alternative, you could still end up paying more in the long run.

Early repayment costs

Some lenders charge repayment penalties if you pay your loan off earlier than agreed. Check to see if your current lender charges early repayment penalties or payout fees, and if this will still help you save when you take out the debt consolidation loan. If you’re getting a home equity loan or a loan against any other asset, the process might involve application fees, valuation fees, legal fees and stamp duty.


If you decide to use the services of a credit provider or a debt consolidation organisation, it’s your responsibility to check for its ASIC licensing. This is because there are brokers and credit providers who operate illegally in Australia.

The good and the not-so-good details of debt consolidation loans

The good

  • You can lower your costs and repayments The majority of all people who opt for debt consolidation do so in order to benefit from lower costs, and if you choose to consolidate your debt you can save as much as 50 per cent on outgoing costs. If you’re looking for a debt consolidation mortgage, you can expect to benefit through lower interest rates than with credit cards and personal loans.
  • No more phone calls from debt collectors If you’re running behind on payments you probably receive a number of pesky phone calls from people chasing you for money. Once you consolidate all your loans, the phone calls will more than likely stop.
  • The potential to access to extra features A debt consolidation loan can offer features that an unsecured line of credit does not, including fixed interest rates and the ability to lock in repayment amounts.
  • You could avoid bankruptcy If you see yourself struggling to make multiple payments and think you might be headed for bankruptcy, consolidating your debts can give you a chance to get back on track.

The not-so-good

  • You could lose your property to foreclosure If you get a debt consolidation mortgage and fail to make timely payments, you give the lender the right to foreclose on your property. This is because the lender uses your property as collateral towards the amount you borrow, so when you fail to repay this amount in a timely manner, you stand to lose the property in question.
  • Increasing debt There are instances when people who opt for debt consolidation end up increasing their debt. For example, if you consolidate your credit card balances through a debt consolidation mortgage, you might start racking up big debts on your credit cards again and increase your problems even further.

How can I make debt consolidation work for me?

While taking out a debt consolidation loan can help you reduce the interest you pay and better manage your repayments, it's up to you to make the most of your debt consolidation efforts. The following are some useful tips you can take on to help your debt consolidation loan work best for you:

  • Work out a debt management plan. If you're in a position where you need to enter a debt agreement with your creditors, it's important to agree to a plan that is manageable by you. These agreements are informal and can be worked out between you and your credit provider. If you choose to take out a debt consolidation loan you can make sure that the debt management plan you entered into.
  • Use a budget. Budgeting your debt consolidation repayments ensures that they will remain manageable over the term of the loan. How much will you need to pay each month to ensure your debt is paid off? Work your loan repayments into your budget before you take out the loan.
  • Compare your options. Make sure you take a look at all the options available to you before you apply for a debt consolidation loan. Are you applying for the most competitive option available? Ensure you look at fees as well as rates and any additional features you may have access to see if you're getting the best option for you.
  • Make extra repayments. If your loan allows for it, making additional repayments can help see your loan paid off sooner and save interest. Make sure you won't be charged fees for additional repayments, lump sum payments or early repayment penalties depending on how you plan to repay your loan. If you find you're saving considerable on interest from consolidating your debt, make sure to put those savings back into your loan.
  • Look for ways to cut down on your expenditure. Are there any ways you can cut down on your outgoings? By cutting down your expenditure you can have more money to make additional repayments, the benefits of which are explained above. Ensure you're in a safe position to manage your repayments and pay back your debts.
Sad debt man Gary is in a bit of a situation.

He is paying off a few debts — two credit cards a car loan and another small personal loan — and he finds that a large portion of his salary is being used each month to pay off his debt.

Gary is at a loss for what to do.

Gary ConfusedHe wonders if there’s a way to cut down the amount he pays in interest each month, thereby allowing him to pay off his debt faster. He works out a budget to see if making additional repayments will make a difference, but the amount he would be able to afford to pay extra would not be paying down enough of his principal loan amount — only what he’s being charged in interest.

Gary is still a little confused.

Gary Debt applyAfter looking online he sees that he can apply for a debt consolidation loan with a very competitive rate. He calculates that his new interest rate means he’ll be paying less interest across all of his debt than he currently is, and he’ll be able to better manage his loan with one repayment each month.

Gary's situation is looking better.

Gary happyGary also uses a debt consolidation calculator and sees that he’ll pay off his debt much earlier than if he’d continued with his current repayments, and he’s going to save thousands in interest.

He compares his debt consolidation loan options and after punching the figures into the calculator he applies online.

Gary is now quite happy with his situation.

Questions you've had about debt consolidation but haven't asked

The debt consolidation road map can be tricky to navigate, and you may not get all the answers you need from your bank or financial planner.

Is debt consolidation right for me?

As outlined on the page above, there are a few different situations that might make debt consolidation the right option for you. Before you take out a debt consolidation loan, work out what your current monthly repayments are as well as the interest rates you're paying. Then you can consider the options you have available for your debt consolidation and see if you'll actually save when you consolidate.

Can I consolidate more than one credit card?

If you have more than one credit card from different brands you might be finding it hard to manage your interest repayments. By rolling your existing debts into new consolidation loan, you could lower your repayments and pay less interest. If you have one credit card with a $6,400 at 19.99% p.a., another $1,000 at 13.49% p.a. and an "interest-free" store card, these can all be consolidated into a new loan.

I'm on Centrelink, can I still apply for debt consolidation?

Centrelink can be classed as genuine income by some lenders, and can be used as income to assess your serviceability for a debt consolidation loan. It's important to calculate your repayments and find out if your lender accepts your types of income. If you are on Newstart or Youth Allowance you may need to speak to your creditors and work out a repayment please.

Are debt consolidation companies legitimate?

Facing down the barrel of financial peril is scary enough, without having to worry about the legitimacy of the company you are dealing with. As with any financial product, it's important for you to compare a wide range of products and decide whether these are right for you before applying. Use the tables above to research and compare a range of legitimate companies. As a rule of thumb, if an offer looks too good to refuse, then it probably is.

My current bank offers a debt consolidation loan. Should I just apply with them?

There are some definite advantages to applying with your current bank — they may be more willing to approve you because they have a past relationship with you and they can see all your incomings and outgoings. Then again, they may not be able to offer you the best deal. You may want to compare your options before you apply to see how competitive their products are. Then, talk to your bank before applying to discuss your eligibility.

What's the difference between debt consolidation and a debt agreement?

A debt consolidation loan is just a standard personal loan product that allows you to consolidate your current debts into one. A debt agreement is something usually taken out by people with large debts and even bad credit history and is a form of bankruptcy. Make sure you find out the terms of the loan you're entering into and the effect it'll have on your credit file.

I have some equity in my home. Should I refinance and consolidate my debts that way?

If you have equity, then this is another option you have available to you, but there are some things to consider. First off, while rates on home loans are generally much lower than on personal loans, remember these are spread across a much longer term — thirty years as compared to a five or seven-year term. You also need to consider the costs of refinancing before you take on this kind of loan. This kind of option might be good to consider if you have a large amount of debt to consolidate or if you find this is the most competitive consolidation option that will help best manage your debt.

Do I need to spend or save differently when I consolidate my debts with a loan?

This depends on the lender you apply with. With regular debt consolidation personal loans you will not be required to change your budget, so long as you manage your repayments. With other types of debt consolidation loans, your budget may be restricted as you are technically entering into a form of bankruptcy. Keep in mind that even if you aren't restricted, it's always a good idea to go over your budget and see if there's any way to cut back on expenses to pay down your debt faster. This can help you save on interest.

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45 Responses

  1. 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 checking?

    • finder Customer Care
      JohnSeptember 7, 2018Staff

      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!


  2. 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 checking?

    • finder Customer Care
      JohnSeptember 7, 2018Staff

      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!


  3. 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%

    • finder Customer Care
      NikkiApril 19, 2018Staff

      Hi Jodie,

      Thanks for your message and for visiting finder – the leading comparison website & general information service built to give you advice in your buying decision needs. How are you doing today?

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

      Alternatively, The information above shows you multiple providers for debt consolidation. Enter the amount to be consolidated and click the triangular button beside the INTEREST RATE p.a. to show you the providers within a 9%-12% fixed interest rate.

      Please note that we’re a product comparison website and we hold no affiliation with any company we feature on our site. We provide general information on products to assist you in your buying decision process hence we cannot recommend product / service that is rightfully fit for you.

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


  4. 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?

    • finder Customer Care
      JonathanFebruary 21, 2018Staff

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



  5. Default Gravatar
    ChanelleSeptember 26, 2017

    Please contact me to discuss my current situation.

    Thank you

    • finder Customer Care
      JoanneSeptember 26, 2017Staff

      Hi Chanelle,

      Thanks for your enquiry.
      You have reached finder, we are an Australian financial comparison website and general information service. To speak with a representative regarding your concern, you may need to click on the go to site option on this page so you can reach out to your preferred company.


  6. Default Gravatar
    KerrySeptember 3, 2017

    I’m 62 and I need to get a personal loan for debt consolidation. I’m concerned to try as I don’t want to be declined because of my age. Do some banks discriminate based on age even though I am still working full time and will be for quite a few years yet. I do have excellent credit

    • Default Gravatar
      MariaSeptember 3, 2017

      Hey Kerry,

      Thank you for reaching out to us.

      Lenders are not allowed to discriminate based on age but still need to make sure you satisfy the usual lending criteria for personal loans.

      You may check out this page for lenders who consider applications for people nearing or are in retirement:

      As finder is an online comparison service and is not a product issuer, it would be best to get in touch with a lender featured on our page to discuss your eligibility or options.

      Before applying, please ensure that you meet the eligibility criteria and requirements and to read the details, as well as the relevant Product Disclosure Statements/ Terms and Conditions of the option before making a decision and consider whether the product is right for you.

      I hope this helps.


  7. Default Gravatar
    rodJuly 8, 2017

    I want to consolidate 3 cc and 1 personal loan worth around 14000 altogether, i earned 92000 this fin year and these are my only debts.

    • Default Gravatar
      DanielleJuly 9, 2017

      Hi Rod,

      Thank you for contacting finder. We are a comparison website and general information service, we’re more than happy to offer general advice.

      You may provide that information on the table above and it will populate options that would fit your needs. You may review and compare the options available on the table. Once you have selected one, you may proceed by clicking the green “Go to Site” button.

      I hope this helps.


  8. Default Gravatar
    AnthonyMarch 21, 2017

    Hi just a quick question if I consolidate my debts into 1 does that allow u to be able to get a new credit card or loan another part of the question for example if I have $20,000 worth of debt and I consolidate for $30,000 what happens to the rest after I’ve consolidated my debt does that become money u can use like a loan or does the consolidation loan only cover ur debt

    Thanks for allowing me to ask these questions

    • finder Customer Care
      MayMarch 22, 2017Staff

      Hi Anthony,

      Thank you for your inquiry.

      With debt consolidation, if you meet the eligibility criteria, a lender may only approve you for an amount that you are able to service and repay. They would take all your previous debts into account including your credit card limit, other personal loans, etc. So basically, to help you in managing your debts, they would usually approve an amount that can only cover your debts.

      Furthermore, if you are applying for a higher amount, though, you would need to specify in your application that you would want to use the money to consolidate debts as well as for another purpose. If in case this for a debt agreement, none of this applies as it is already a form of bankruptcy.


    • Default Gravatar
      AnthonyMarch 22, 2017

      Ok so do they add up all the debt

    • finder Customer Care
      MayMarch 23, 2017Staff

      Hi Anthony,

      Thanks for getting back.

      Basically, yes. All the debts that you want to consolidate will be taken into account.


  9. Default Gravatar
    JulieJanuary 25, 2017

    I am waiting on my late mothers estate which has been left to my brother and myself 50/50 .It has been cleared from being in probate and now just waiting to be finalized which we have been informed by the lawyers will take about two wks to be cleared. I was on a career’s pension for my mother and since her death i now have applied for unemployment benefits till i get another job. Unfortunately the change over from the career’s payment left a time gap and i wasn’t able to pay certain bills which have to be paid like rent and power etc. I am seeking to apply for loan of $1,000 and will be able to repay the entire loan with in less than a month. Can any lending company help me out please

    • finder Customer Care
      LouJanuary 26, 2017Staff

      Hi Julie,

      Thanks for your question.

      The lenders on this page may consider you for a loan.

      Please click the name of the lender so you’ll see your loan options. Do check also the eligibility criteria to apply before hitting the ‘go to site’ button to submit your application.


  10. Default Gravatar
    KateNovember 25, 2016

    Any unsecured loans for repaying a U.K. Credit card. Australian citizen. Retired.

    • finder Customer Care
      MayNovember 29, 2016Staff

      Hi Kate,

      Thanks for your question.

      Since you are retired, the loans that may be available to you are the ones listed on this page. I suggest that you read through the page to get more information on our guide. Before you apply, it’s best to the review the criteria and requirements and then contact the lender to discuss your chances of approval.

      Hope this helps.


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