A debt consolidation loan combines all of your debts into one personal loan, typically saving you on interest costs. It can also help you manage your repayments more easily and help you to get out of debt sooner. Use our expert tables and compare repayments to find a debt consolidation loan to fit your needs.
Fixed
Borrow up to $50,000 unsecured. Perfect if you earn more than $22,100 p.a. and have good to excellent credit. Back to back winner of Mozo’s Experts Choice Unsecured Personal Loan Award, 2021 & 2022^.
Repayment terms from 2 years to 7 years. Representative example: a 5 year $30,000 loan at 5.95% would cost $34,757.21 including fees.
Read our Mozo Review to learn more about the NOW Finance Unsecured Personal Loan
Excellent Credit
OurMoneyMarket offer competitive low rates for borrowers with excellent credit on loans up to $75,000, plus free extra repayments and fee-free redraw facility. Winner of Mozo's Experts Choice Unsecured Personal Loan 2021 award^.
Repayment terms from 1 year to 7 years. Representative example: a 5 year $30,000 loan at 5.45% would cost $34,590.57 including fees.
Read our Mozo Review to learn more about the OurMoneyMarket Low Rate Personal Loan
Unsecured, Fixed, Excellent Credit
With low rates for borrowers with excellent credit, a quick 1 minute rate estimate and simple online application, there’s a lot to love about this loan! You’ll not only benefit from no exit fees, there are also no early repayment fees. You could qualify by simply earning above $25,000 and you’ll be on the way to start spending (other eligibility criteria may apply).
Repayment terms from 3 years to 5 years. Representative example: a 5 year $30,000 loan at 6.39% would cost $35,126.40 including fees.
Read our Mozo Review to learn more about the Plenti Personal Loan
Fixed, Unsecured
Handypay offers flexible home improvement loans for Excellent Credit or better. Handypay is a specialist home improvement plan provider and offers loans up to $75,000.
Repayment terms from 1 year to 7 years. Representative example: a 5 year $30,000 loan at 5.75% would cost $34,840.18 including fees.
Read our Mozo Review to learn more about the Handypay Home Improvement Loan
Fixed
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).
Repayment terms from 3 years to 7 years. Representative example: a 5 year $30,000 loan at 5.35% would cost $34,832.61 including fees.
Read our Mozo Review to learn more about the Harmoney Unsecured Personal Loan
Fixed
Wisr offers personal loans for any worthwhile purpose, tailored to your credit score to ensure you’re getting a fair deal. Plus, no ongoing or early exit fees. Loans from $5,000 to $79,000. Terms of either 3, 5 or 7 years. $595 establishment fee. Eligibility criteria applies.
Repayment terms from 3 years to 5 years. Representative example: a 5 year $30,000 loan at 5.95% would cost $35,352.21 including fees.
Read our Mozo Review to learn more about the Wisr Unsecured Personal Loan
Fixed
Borrow up to $50,000 unsecured. Perfect if you earn more than $22,100 p.a. and have good to excellent credit. Back to back winner of Mozo’s Experts Choice Unsecured Personal Loan Award, 2021 & 2022^.
Repayment terms from 2 years to 7 years. Representative example: a 5 year $30,000 loan at 5.95% would cost $34,757.21 including fees.
Read our Mozo Review to learn more about the NOW Finance Unsecured Personal Loan
Handypay offer flexible green loans up to $75,000 for Excellent Credit or better. Handypay is a specialist home improvement plan provider.
Repayment terms from 1 year to 10 years. Representative example: a 5 year $30,000 loan at 5.79% would cost $34,873.55 including fees.
Read our Mozo Review to learn more about the Handypay Green Loan
Fixed, Unsecured
Heritage Bank discounted rates for borrowers with excellent credit. Available loans starting from $5,000 to $25,000. Your choice of loan terms up to five years. Extra repayments allowed, but may incur fees.
Repayment terms from 1 year to 7 years. Representative example: a n/a year $0 loan at 7.99% would cost $6,988.90 including fees.
Read our Mozo Review to learn more about the Heritage Bank Standard Personal Loan
Variable
Repayment terms from 2 years to 7 years. Representative example: a 5 year $30,000 loan at 5.75% would cost $35,370.18 including fees.
Read our Mozo Review to learn more about the Latitude Personal Loan
^See information about the Mozo Experts Choice Personal loans Awards
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A debt consolidation loan is a type of personal loan that allows you to roll several different debts, like credit card balances, store cards or even other personal loans, into one place, so you only have to deal with a single repayment.
That means you only have to remember one due date. Plus, debt consolidation loans can have other benefits like getting you a lower interest rate than on some other products or meaning you only have to pay one annual fee - or no annual fee.
Debt consolidation loans can help you to better manage loan repayments. Here are some reasons for opting for a debt consolidation loan.
Like any other kind of lending, a debt consolidation loan could hurt your credit score if you aren’t responsible with meeting your repayments. However, if you’re responsible, it doesn’t have to affect your credit negatively.
If you apply for a debt consolidation loan, it will appear on your credit history as an inquiry and, if you’re successful, as a new source of credit available to you. This can be good or bad - it lowers your credit utilisation, which is usually a good thing, but it also raises the amount of total credit available to you, which isn’t always as positive.
Paying off lingering debts (and closing old credit accounts if you no longer use them) is a good thing and will usually a positive move not only for your credit history but for your finances in general.
As the name suggests, a debt consolidation loan works by rolling debts from multiple sources, for instance car loan and credit card, into a single personal loan.
Apart from the benefit of saying goodbye to multiple payments as you'll only have one monthly repayment, you'll also get the chance to reduce the interest rates you're paying, particularly if you're consolidating high rate credit or store cards into the new loan.
Scenario: Say you have the following debt:
In this scenario, your monthly repayments would be $899 and over 3 years, you'd pay $5,373 in interest. Whereas if you rolled that $27,000 worth of debt into one single loan with an 8% interest rate, your monthly repayments would go down to $846, and you would pay just $3,459 in interest over 3 years - that's a total saving of $1,914 in interest.
While one low rate debt consolidation loan could definitely help you kick your debt to the curb, it's important to know how to use the product to your advantage whilst avoiding the traps that could see your debt stick around for longer than you'd like.
Here are the absolute must DOs when consolidating debt:
There are plenty of choices when choosing a debt consolidation loan, but the wrong choice could end up costing you big time. So make sure you take the time to consider your different options when it comes to finding the right loan for you. Start by deciding whether you will sign up with a secured or unsecured loan:
2. DO compare interest rates
You'll also have the option of choosing between a fixed and variable personal loan interest rates. Here's the difference between the two:
2. DO look for flexible debt-busting loan features
You're making the smart move of rolling your debt over to a consolidation loan, but you could make an even smarter move by choosing a loan with features that will help you pay off your debt sooner. 'How' you ask? With these two flexible options:
Extra repayments: Okay your finances may not be looking their best now. But you never know when you'll land that work promotion or end of year bonus. So if you find yourself with extra money in your pocket down the track, you'll want to make sure the debt consolidation loan you sign up with gives you the ability to pump it straight into paying off your loan.
Flexible repayment frequency: Did you know that if you choose to repay your loan on a fortnightly schedule rather than monthly, you'll pay off an extra month at the end of the year? It's true. Let's give you a scenario. Say you repay $500 a month - over one year, you'll have paid off $6,000 of your loan. Whereas, if you choose the 26-fortnight option, you will pay off $6,500 - bringing you that much closer to blasting your debt for good.
3. DO set up automatic loan repayments
And last but definitely not least, make sure you never miss a fortnightly or monthly loan repayment by setting up a direct deposit from your bank account to your debt consolidation loan lender.
1. Don't roll your debt into your home loan
Home loan interest rates are competitive right now, with many sitting under the 3% mark. However, be mindful that merging your different debt into your home loan could mean you'll pay more in interest in the long run because home loans have a far longer time frame.
Using the example of a $300,000 home loan with a 5% interest rate, by rolling $20,000 into your mortgage, you will end up paying $15,075 in interest on that debt over 25 years. Whereas, if you merge that debt into a consolidation loan over 3 years with a 10% interest rate, you will only pay $3,232 in interest. Rolling debt into your home loan will only make financial sense if you keep repayments high so that you crush the debt in the shortest time possible.
2. Don't forget to check for hidden debt consolidation fees
The interest rate isn't the only thing you should consider when comparing debt consolidation loans. You should also make sure you can afford any fees, including:
3. Don't keep on using your credit cards
Once you've found the right debt consolidation loan for you, it's time to close your old credit card accounts. Not only will this stop you from accruing more debt but if there were annual fees on the card you will no longer have to pay these.
Covid:19 has resulted in a lot of financial difficulty for many Australians. If you’re struggling with paying off your debts and managing repayments, there are resources available to help you. From debt advisors to online help, here are a few places you can turn for help with debt.
Debt is no fun, but you shouldn’t be embarrassed to seek help. Taking steps to fix the problem is much more admirable than sticking your head in the sand!
There are a few options for taking out a debt consolidation loan. While banks may seem like the most obvious choice, credit unions and peer to peer lenders are also perfectly good options for consolidating debt. Each have advantages and disadvantages whether it’s fees, customer service or borrowing limits. Simply check out our debt consolidation table above, to weigh up different providers and find what suits you.
It all depends on your current banking situation, but there are both pros and cons for staying with the same lender when you take out a debt consolidation loan.
| Pros | Cons |
|---|---|
| Convenient | Potentially missing out on better deal from alternate lender (less fees, lower interest) |
| Increased chances of being approved because on long standing relationship | Current lender may not offer you a good deal since you’re already a loyal customer (they don’t feel they need to impress you, so to speak |
Make sure you shop around, compare providers and then talk to your current bank and see who can offer you what you want. Or try Mozo’s Switch & Save Calculator to find out how much you can save if you were to jump ship.
Every lender will have their own borrowing limits for debt consolidation loans. In addition to the bank or lenders loan products, the amount of money that you will be able to borrow will depend on a number of factors such as your credit history, how much money you earn, how long you've been at a job for and how well you’re set up to handle repayments comfortably. While it’s important to borrow enough to consolidate your existing debts, resist borrowing more than you need to - you don’t want to be making bigger repayments than you are already making.
A debt consolidation loan rolls all your debt, like credit card and card loan debt, into one loan where you make one easy-to-manage monthly repayment. Your provider will indicate what the minimum repayment requirements on your new loan will be. This is the amount you need to pay each month in order to pay off your loan within the loan term. Jump over to our personal loan repayments calculator to see how much your repayments could be at different interest rates and different loan amounts.
While that’s all you need to pay each month, it’s a good idea to look for a loan that allows you to make extra repayments so that you can use any extra cash, like a bonus at work or a cash present, to rid yourself of debt sooner.
If your debt consolidation loan application gets rejected it doesn’t mean you can’t apply again, it’s just best if you wait a little while before you do. Instead of banging down the door of your bank or loan provider and demanding they accept your request, give yourself 3 or 6 months to get everything in order and ultimately lessen your chances of being rejected again. Also be sure to get a copy of your credit report prior to apply so that you can make sure there are no issues.
The interest rate on debt consolidation loans will depend on a number of factors including whether you are taking out a secured or unsecured debt consolidation loan. A secured loan will usually have a lower rate because you are putting up an asset as security.
These days, many providers offer Australian borrowers personalised interest rates depending on their credit history. Usually, the better your credit score, the lower the interest rate will be. This is why many lenders have 'from' rates advertised.
Yes. Standard fees on debt consolidation loans include an application fee, loan service fee and default fees if you miss a repayment or don’t make the full repayment amount. You may also have to pay an early termination fee if you pay out your loan early.
Each Australian banking provider has its own criteria for consolidation loan qualification so it will depend on the amount of debt you’re in and your credit history. It is unlikely you will qualify for an unsecured loan if you have bad credit history, have been bankrupt in the last 10 years, or you are currently unemployed.
In Australia, bank and other lenders take into account good and 'bad' behaviour when assessing someone's credit worthiness. This means that if you demonstrate good financial management your credit score will improve over time. If you're looking for ways to improve your credit score read our guide.
Most personal loan lenders will have online application and approval processes and in many instances you could get approval for a loan within hours of submitting your enquiry. The length of time that it will take to organise and consolidate the debt into a single repayment will depend on the banks and lenders you are dealing with. Some personal loan providers will help you with this process, others will leave it up to you to coordinate the closing of accounts and making final payments.
The interest rate does seem higher than other banks. I would love it to be more competitive
Read full reviewThe interest rate does seem higher than other banks. I would love it to be more competitive
Took out a $10,000 personal loan for a medical procedure. I’ve been a lifelong customer of Commonwealth Bank and thought they’d offered me a good package as this is the first and only loan I’ve had. Was unknowingly sold junk insurance and am now part of a class-action suit for a refund of the insurance and interest they charged. Here’s hoping they do the right thing!
Read full reviewTook out a $10,000 personal loan for a medical procedure. I’ve been a lifelong customer of Commonwealth Bank and thought they’d offered me a good package as this is the first and only loan I’ve had. Was unknowingly sold junk insurance and am now part of a class-action suit for a refund of the insurance and interest they charged. Here’s hoping they do the right thing!
They are very transparent with their fee's and we were able to get an unsecured loan to pay off our credit card and pay for a trip to England when my father died. We only had one person who was on a permanent wage and don't live in a home we own. No mortgage and we've managed to have it almost paid off in 4 years
Read full reviewThey are very transparent with their fee's and we were able to get an unsecured loan to pay off our credit card and pay for a trip to England when my father died. We only had one person who was on a permanent wage and don't live in a home we own. No mortgage and we've managed to have it almost paid off in 4 years
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