Drowning in Debt? How Consolidation Could Save You Thousands

Debt consolidation is simple: you take out one new loan to pay off multiple existing debts. Instead of juggling 3, 4, or 5 different repayments with different due dates and interest rates, you make one single repayment at a lower interest rate.

Before consolidation (typical example):

• Credit card 1: $8,000 at 21.99% → $240/month minimum
• Credit card 2: $4,500 at 19.99% → $135/month minimum
• Personal loan: $12,000 at 13.50% → $280/month
• Buy now pay later: $2,000 → $125/fortnight
• Total: $26,500 across 4 debts, $905/month + $125/fortnight

After consolidation:

• One personal loan: $26,500 at 7.99% → $523/month over 5 years
• Saving: $382+/month immediately
• Total interest saved: approximately $8,400 over the loan term

You go from chaos — multiple bills, multiple due dates, multiple interest rates — to one simple, manageable payment.

Almost any unsecured or secured debt can be consolidated:

• Credit cards (typically 18–22% interest) — the most common debt to consolidate
• Personal loans (8–18% interest)
• Car loans (5–15% interest)
• Buy now, pay later (Afterpay, Zip) — no "interest" but late fees and impact on borrowing capacity
• Store finance (Harvey Norman, Apple financing, etc.)
• ATO tax debts — some lenders will include ATO payment plans
• Payday loans — extremely high cost, priority to consolidate
• Medical debts

Consolidation into a home loan: If you own property, you may be able to consolidate high-rate debts into your mortgage. Home loan rates (5–6%) are dramatically lower than credit card rates (20%+). The risk is that you're extending the repayment term — but we can structure the loan to avoid this trap.

The data tells a clear story about financial stress in Australia right now:

• 51.92% of all personal loan applications in Australia are for debt consolidation
• Debt consolidation enquiries surged from 23.6% to 33.5% of all loan enquiries in just 6 weeks (Feb–Apr 2026)
• The average consolidation loan is $17,407
• The average personal loan is $22,643 over 35 months
• Average weekly repayment on a personal loan: $178/week

The cost of living crisis — rising rents, groceries, insurance, and interest rates over the past two years — has pushed millions of Australians to rely on credit cards and buy-now-pay-later services. Now those debts are compounding and becoming unmanageable.

Consolidation is the most common and effective first step to regaining control. It doesn't erase the debt, but it makes it manageable, cheaper, and gives you a clear end date.

Short answer: it can actually help your credit score.

Here's what happens to your credit file when you consolidate:

Temporary minor impact:

• The new loan application creates a hard enquiry — this has a small, temporary negative effect
• Closing old accounts changes your credit mix — also minor

Positive long-term impact:

• You're replacing multiple debts with one — reducing your overall credit utilisation
• Closing credit card accounts reduces your total available credit, which lenders view positively when you apply for future loans
• Making one consistent on-time repayment builds a positive payment history
• You're less likely to miss a payment when you only have one to manage

The biggest credit score risk isn't consolidating — it's NOT consolidating. If you're making late payments or only paying minimums on multiple debts, your credit score is already being damaged. Consolidating and making on-time repayments is the fastest path to credit recovery.

There's one critical rule with debt consolidation: close the credit cards and accounts you've paid off.

The most common mistake: people consolidate $20,000 of credit card debt into a personal loan, then slowly run the credit cards back up again. Now they have the personal loan AND new credit card debt — they're worse off than before.

Our approach:

• We help you calculate the exact consolidation amount
• The new loan pays off your old debts directly (funds go to the credit card companies, not to you)
• We recommend closing the old credit card accounts once they're paid off
• If you need one credit card for emergencies, keep one with a low limit ($2,000–$3,000) and pay it off in full each month

Consolidation works best when combined with a commitment to change the habits that created the debt. One loan, one repayment, one clear end date — then you're done.

Step 1: List all your debts. Write down every debt: creditor name, balance owing, interest rate, and monthly repayment. Include everything — credit cards, personal loans, car finance, BNPL, store cards.

Step 2: Get a free assessment. We'll review your debts, income, and expenses to determine the best consolidation option. This takes about 15 minutes and there's no obligation.

Step 3: We compare options. Personal loan consolidation? Home loan top-up? Secured vs unsecured? We compare across 50+ lenders to find the lowest rate and best structure for your specific situation.

Step 4: Application and approval. We handle all the paperwork. Most consolidation loans can be approved within 24–48 hours.

Step 5: Payout and fresh start. The new lender pays off your existing debts directly. Your old accounts are closed (or reduced). You make one simple repayment going forward.

What you need to apply:

• Photo ID
• Most recent payslips (or business financials if self-employed)
• Statements for all debts you want to consolidate
• Recent bank statements (last 90 days)