Juggling multiple credit cards, store cards, or personal loans each month can make it hard to keep track of what you owe — and how much you're really paying in interest. Debt consolidation combines those separate debts into a single personal loan, with one fixed repayment and one interest rate.

A debt consolidation loan is a type of personal loan used to pay off multiple existing debts, leaving you with just one lender, one repayment, and one interest rate to manage.

• Loan Amount: Typically covers the total balance owed across your existing debts

• Repayment Term: Usually 1 to 5 years, depending on the lender

• Interest Rate: Fixed, so your repayment stays the same for the life of the loan

• Unsecured: No asset is required as security

Debt consolidation can work well if you:

• Are juggling several repayments across different due dates

• Are currently paying high interest on credit cards or store cards

• Want the certainty of a fixed repayment and a clear end date

• Have a stable income to support the new repayment

It may not be the right move if you:

• Would end up paying more in fees or interest overall once the new loan term is factored in

• Haven't addressed the spending habits that led to the debt in the first place

• Could pay off the existing debt faster by other means (e.g. a hardship arrangement)

• Compare total repayments: Add up what you're currently paying across all debts and compare it to the new consolidated repayment

• Check for early repayment or exit fees on your existing debts

• Factor in new loan fees: consolidation loans have their own establishment and account-keeping fees

• Look at the full cost, not just the rate: a lower rate over a longer term can sometimes cost more overall

• Check your borrowing power: Use the Borrowing Power Calculator to get a sense of what a consolidated loan could look like for your situation

👉 Compare Personal Loan Options

Say you're carrying a combined $10,000 across a couple of credit cards and a store card, each charging around 20–21% p.a. in interest with their own minimum payment. Consolidating that into a single personal loan over a 3-year term at an indicative rate (personal loan rates typically range from 10.95%–29.95% p.a., depending on your credit profile and the lender) could mean one predictable fixed monthly repayment instead of several separate minimums — though your actual rate, term, and repayment will depend on your balances, credit profile, and the lender you're matched with. A Finance Consultant can run the exact numbers for your situation.

👉 Calculate Your Repayments

Applying for a new loan involves a credit check, which can have a small, temporary impact. Making consistent repayments on the new loan can help your credit over time.

It depends on the lender. Simplify compares options across a panel of lenders, so we can help find a fit even if your credit isn't perfect — though your rate may be higher.

No. Debt consolidation is simply refinancing multiple debts into one loan. It's different from formal debt management plans or insolvency processes, which involve a third party managing your debt on your behalf.

Compare the total cost (repayments plus fees) of your current debts against the total cost of the new loan over its full term — not just the monthly repayment.

Need help weighing up your options? 👉 Contact a Loan Expert