Creditworld.com.au

Debt Consolidation

Consolidate your debt to a lower interest rate and make repayments more manageable month-to-month.

Westpac unsecured personal loans

Westpac Unsecured Personal Loan

Apply before 6 December 2017 and pay $0 establishment fee. Borrow between $4,000 and $50,000 (conditions apply). Flexible loan terms from 1 to 7 years. You can refinance an Australian, non-Westpac Personal Loan, credit card or store card.

12.99% p.a.
fixed rate loan
$0*
Apply by 6 Dec 2017

Save $250

St George unsecured personal loans

St George Unsecured Personal Loan

Consolidate debt or buy what you need. Choose between a fixed rate or variable rate and borrow between $3,000 and $40,000.

12.99% p.a.
fixed rate loan

12.99% p.a.
variable rate loan

$195
Establishment Fee

Banksa unsecured personal loans

BankSA Unsecured Personal Loan

Choose between a fixed rate or variable rate. Consolidate debts to a single loan, with one rate, regular repayment and set of fees.

12.99% p.a.
fixed rate loan

12.99% p.a.
variable rate loan
$195
Establishment fee

BOM unsecured personal loans

Bank of Melbourne Unsecured Personal Loan

Borrow up to $40,000 without offering an asset as security. Choose between a fixed rate or variable rate.

12.99% p.a.
fixed rate loan

12.99% p.a.
variable rate loan
$195
Establishment fee

If you have a number of personal loans, credit cards and other debts, it can often feel like you are overwhelmed with debt. With so many different interest rates, fees and repayment due dates to think about, it can be all too easy to get snowed under.

When money gets tight, and you are unable to make your repayments, it can feel like you have to decide which ones will get your attention this month – and which will have to wait until more money comes in. But, unpaid repayments can rack up extra interest and fees, and may result in black marks on your credit file.

The solution? For some folks struggling with multiple debts, debt consolidation can be the answer to their problems. Allowing them to roll their debts into one loan, debt consolidation can help to reduce stress, while making repayments more manageable month-to-month.

So, is debt consolidation right for you? Let’s take a closer look at debt consolidation, so you can make the right decision for your situation.

What is debt consolidation?

Debt consolidation can either involve a debt consolidation loan that borrowers seek out themselves, or a debt consolidation service, which does the work of creating a debt consolidation program for borrowers in trouble.

A debt consolidation loan can often be a popular option for people who have multiple debts, such as personal loans, credit cards, store cards and other types of loans. A debt consolidation loan allows the borrower to pay off all their loans, so they only have one loan and one repayment to worry about.

By clearing their other debts, borrowers may feel reduced pressure, especially if creditors have been hassling them to make repayments. It may also feel less stressful having just one repayment each month, instead of multiple repayment amounts on different dates, some of which they may have fallen behind on.

With the right debt consolidation loan, borrowers can find a monthly repayment schedule they can afford. As long as they make repayments on time, this may help to rebuild their credit for the future – instead of letting repayments slide, which could result in credit problems later on down the line.

When should I consider debt consolidation?

For many borrowers struggling with multiple debt repayments, debt consolidation can be a relief. But that doesn’t mean it’s the right option for everyone. If you’re thinking about applying for debt consolidation, it’s important to understand what you’re getting into – and whether it will actually improve the situation you are in.

  • If you have a number of loans, credit cards and other debts that you are struggling to repay, you may choose to consider debt consolidation.

  • If you’re feeling stressed thinking about how many repayments you have to deal with each month, debt consolidation could provide an answer.

  • If you are unable to repay all your repayments each month, and sometimes have to leave certain repayments unpaid, debt consolidation could be for you.

  • If you want to save money on interest by paying off your high interest loans and credit cards, and switching to one loan with a lower interest rate, debt consolidation could help you do that.

  • If you think that you might be better off paying off your debts over a longer period of time, with a lower monthly repayment, debt consolidation may allow you to arrange that.

However, as we said, debt consolidation is not for everyone – and it doesn’t always provide the solution borrowers need. If you’re still weighing up applying for a debt consolidation loan, check out the pros and cons of debt consolidation, while taking into account the best way to deal with debt consolidation options.

Pros and Cons of Debt Consolidation

To help you weigh up the various advantages and disadvantages of debt consolidation, here are some of the pros and cons of applying for a debt consolidation loan.

Debt Consolidation Pros

  • Borrowers no longer have to keep track of different repayment due dates, loan types, interest rates and fees.
  • One monthly repayment can be easier to keep track of, compared to multiple repayments, often paid on different dates throughout the month.
  • Choosing the right debt consolidation loan can provide borrowers with a lower interest rate than the various interest rates previously applied to their debts.
  • With a lower interest rate, a debt consolidation loan may provide borrowers with lower monthly repayments, which fits in better with their budget. This may also help to avoid black marks on the borrower’s credit file when repayments remain unpaid.
  • By spreading multiple debts over a new debt consolidation loan, borrowers may be provided with longer to repay their debt.
  • A longer repayment schedule may help to reduce stress, especially if creditors were previously contacting them about their unpaid debts.

Debt Consolidation Cons

  • After paying off multiple debts with a debt consolidation loan, borrowers may feel they have ‘cleared’ their debt, encouraging them to spend more, getting them into further financial trouble.
  • By repaying debt over a longer period of time, borrowers may still end up paying back more interest overall, even if the interest rate applied to the debt consolidation loan was lower.
  • Borrowers with bad credit may still find it difficult to get approved for a debt consolidation loan.
  • Stressed borrowers may choose to apply for a debt consolidation loan or program that is unsuitable, simply to get out of trouble quickly.

How to Best Deal with Deal Consolidation

As with any financial product, when applying for a debt consolidation loan, it’s best to understand what you’re getting into – before you sign on that dotted line.

  • Get Financial Advice: If you are really struggling with debt, speaking with an unbiased financial advisor may be your best bet.

  • Do Your Homework: Find out what’s on offer, and do some research to work out which option is best for you. Don’t get sucked into offers that promise the world. Read the small print and work out whether going your own way would be financially advantageous. If it looks too good to be true, it probably is!

  • Look At The Overall Cost: Take into account all the associated costs, thinking about any fees you may have to pay to be released from unpaid loans. Think about how much you will pay overall on the new loan, with total interest and any fees included.

  • Rebuild Your Credit: Use the debt consolidation loan to get your debts under control, and make all repayments on time. This could help you rebuild your credit over time, making it easier to apply for credit and loans in the future.

  • Don’t Make Multiple Applications: When you apply for credit, the credit provider can see how many other recent applications you have made. Multiple applications can make a borrower seem desperate for credit. This may seem like more of a risk to lenders, leading to potential application rejection.

  • Stop Borrowing After Debt Consolidation: Don’t be fooled into thinking your debts have now been ‘cleared’. Avoid overspending, and concentrate on paying off your new debt consolidation loan.

  • Compare The Options: Use Credit World to find and compare a number of debt consolidation options, and find the best one for you. Start comparing today!