Aussie spending: Why now’s the time to consolidate your debt

Aussie spending has been turbulent in 2020, with the devastating effects of the bushfires into the outbreak of COVID-19.  

In fact, according to Deloitte Access Economics’ latest quarterly Retail Forecasts subscriber report (Q2, 2020), retail spending has been a rollercoaster so far this year. 

The report revealed that after the surge in spending growth in the March quarter, Deloitte predicts that it will contract again by 4.0% in the June quarter. 

“2020 has been a tumultuous year for retailers. We’re not even halfway through, but across the whole sector we expect calendar 2020 to register a record breaking fall in real retail sales,” Deloitte Access Economics partner and Retail Forecasts principal author David Rumbens said.

“But while the average is dire, there may not be many retailers performing at the average – many will fare much worse, while supermarkets, pharmacies and hardware, amongst others, have been experiencing a golden run.”

Source: ABS Cat 8501.0, Deloitte Economics

It’s no secret that there has been a massive swing in consumers’ ability and willingness to spend. For some it has been a time to cut back and save or pay down debt, while others are splurging more than usual as they shop from home.

“Consumer willingness to spend will likely be buffeted by a number of different factors, meaning that one month’s trading experience may be a terrible guide to how the year as a whole pans out,” Rumbens said.

So, no matter which side of the spender-saver fence you sit on, if you are nestling old or new debt, it may be time for you to bid it farewell with a debt consolidation loan

How does a debt consolidation loan work?

A debt consolidation loan is a type of personal loan where you can combine a range of different debts and pay them back under one (and in some instances lower) interest rate. This could include credit card debt, store cards, other personal loans or car loans. 

Essentially, this loan rolls your debts into one so you only have to remember one loan term, one repayment due date, one repayment amount and one interest rate.  

Is a debt consolidation loan right for you? 

It all depends on your debts and your personal circumstances. In some cases, this type of loan could end up not only saving you money but also time and hassle as well. 

Here are some examples of when a debt consolidation loan may be a good idea: 

  • You find having multiple repayment due dates confusing 
  • You have a number of different debts with high interest rates 
  • You are unsure about which debts you should prioritise 
  • The benefits of a debt consolidation loan outweighs the disadvantages (for example, a longer loan term doesn’t end up costing you more than paying off your debts separately). 
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Last updated 14 June 2024 Important disclosures and comparison rate warning*
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    Fast, easy and 100% online, this is a low cost loan with no ongoing fees or extra repayment penalties. It's perfect for savvy borrowers with great credit. If you’re over 18 and earn above $30,000, you could qualify (other eligibility criteria may apply).

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    6.57% p.a.to 18.99% p.a.
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    Competitive fixed rates on loans up to $75,000 depending on your credit score. Zero monthly account keeping fees, no exit fees and no early repayment fees. Make weekly, fortnightly or monthly repayments, over 1 to 7 years managed entirely online, at any time. Fast and easy, 100% online application.

    Repayment terms from 1 year to 7 years. Representative example: a 5 year $30,000 loan at 6.57% would cost $35,528.12 including fees.

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    5.76% p.a.to 24.03% p.a.
    6.57% p.a.to 24.99% p.a.based on $30,000
    over 5 years

    Roll multiple debts into one loan to streamline your finances with one set of repayments and one interest rate. Competitive fixed interest rates with no monthly or early repayment fees and flexible repayment options. Easy online application and funding in as little as 24 hours (subject to approval).

    Repayment terms from 3 years to 7 years. Representative example: a 5 year $30,000 loan at 5.76% would cost $35,173.52 including fees.

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On the other hand, if you are already on top of your debt repayments, or have almost paid it down in full, a debt consolidation loan may not be worth it. 

Similarly, it’s important to keep in mind that these types of loans are designed to help you pay down your debt. So if a debt consolidation loan is likely to cost you more in interest, it may be a better idea to pay down your debts separately. 

RELATED ARTICLE: Where to get a no interest or low interest loan during COVID-19

Need a place to start looking for a debt consolidation loan? Check out the list below or jump over to our personal loan comparison table.

* WARNING: The Comparison Rate combines the lender's interest rate, fees and charges into a single rate to show the true cost of a personal loan. The comparison rates displayed are calculated based on a loan of $30,000 for a term of 5 years or a loan of $10,000 for a term of 3 years as indicated, based on monthly principal and interest repayments, on a secured basis for secured loans and an unsecured basis for unsecured loans. This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan.

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