--- title: "Debt Consolidation Loans: What Are They Good For and How to Apply" description: A Debt Consolidation Loan is any loan which is large enough to pay out your existing debts. A debt consolidation loan will leave you with one loan, to one lender with a one loan repayment. image: https://lanyana.revivefinancial.com.au/hubfs/Debt-Consolidation-Loans-1.jpg --- [![DR-Logo---Powered-by-RF-(2021)-137x60px](https://lanyana.revivefinancial.com.au/hubfs/DR-Logo---Powered-by-RF-(2021)-137x60px.png)](https://debtrescue.com.au) Menu [Apply Online](https://solutions.debtrescue.com.au/online-assessment-form) [1800 003 328](tel:+611800003328) 1800 003 328 - [Recent Articles](https://solutions.debtrescue.com.au/articles) - [Debt Consolidation](https://solutions.debtrescue.com.au/articles/tag/debt-consolidation) - [Debt Agreements](https://solutions.debtrescue.com.au/articles/tag/debt-agreements) - [Informal Agreements](https://solutions.debtrescue.com.au/articles/tag/informal-agreement) - [Debt Relief](https://solutions.debtrescue.com.au/articles/tag/debt-relief) - [Bankruptcy](https://solutions.debtrescue.com.au/articles/tag/bankruptcy) - [Budgeting](https://solutions.debtrescue.com.au/articles/tag/budgeting) - [Business Debt](https://solutions.debtrescue.com.au/articles/tag/business-debt) - [Credit File](https://solutions.debtrescue.com.au/articles/tag/credit-file) - [Education](https://solutions.debtrescue.com.au/articles/tag/education) - [News](https://solutions.debtrescue.com.au/articles/tag/news) - [Research](https://solutions.debtrescue.com.au/articles/tag/research) - [1800 003 328](tel:+611800003328) Talk to a Professional Apply Online [1800 003 328](tel:+611800003328) Call Now # Debt Consolidation Loans: What Are They Good For and How to Apply Posted by [Debt Rescue](https://lanyana.revivefinancial.com.au/articles/author/debt-rescue) on May 16, 2018 1:33:00 PM - [Tweet](https://twitter.com/share) [![Debt-Consolidation-Loans-1](https://lanyana.revivefinancial.com.au/hubfs/Debt-Consolidation-Loans-1.jpg)](https://lanyana.revivefinancial.com.au/articles/debt-consolidation-loans-what-are-they-good-for-and-how-to-apply) A Debt Consolidation Loan is any loan which is large enough to pay out your existing debts. A debt consolidation loan will leave you with one loan, to one lender with a one loan repayment. Many lenders, including some major banks and non-conforming lenders, offer loans to consolidate your debt. Certain lenders will even provide a Debt Consolidation Loan to people with a bad credit rating. ## How Debt Consolidation Loans Work to Reduce Debt So if you are borrowing the exact amount you owe, how do Debt Consolidation Loans save you money? Well, the answer is in the interest. If you are consolidating 4 different lines of credit, you are also paying 4 different sets of interest and fees. Over time, this will add up. By paying it all off with money from one lender, you will only have one set of interest and therefore paying less over time. In this example, someone has $31,000 worth of debt outstanding over 5 years. With the different interest rates and fees involved, the total amount payable at the end of the 5 years is $45,895. |   | Amount Owed | Interest Rate | Fees | Time Remaining | Total Amount Payable | | --- | --- | --- | --- | --- | --- | | Credit Card 1 | $3,000 | 19% | $10 | 5 years | $5,252 | | Credit Card 2 | $5,000 | 21.3% | $10 | 5 years | $8,736 | | Car Loan | $23000 | 13% | $10 | 5 years | $31,907 | | Total Debt | $31,000 |   |   | 5 years | $45,895 | | Debt Consolidation Loan | $31,000 | 9.85% | $5 | 3 years | $36,015 | However, this person was able to consolidate their debts with a loan for $31,000 over 3 years with a better interest rate. So not only is the debt paid off sooner, but the total payable amount at the end of that time is $36.015 which is a saving of $9,880. (Always consult a financial professional before making any decisions regarding your personal finance). ## When Should I Look at Using One? Debt Consolidation Loans are most effective before your debts are an issue. You still need to be able to comfortably make the repayments for the term of the loan. Also if you have been struggling to repay your debts, you may have judgements and defaults marked on your credit file, which will limit your borrowing options. If you are starting to feel the strain from your debts, a consolidation loan may help improve your situation. Before you decide a debt consolidation loan is the best course of action for you, you need to consider your situation. If your debts have early payout fees, the costs of setting up your loan might outweigh the benefits of implementing one. It's always best to consult with a professional before you make any decision regarding your finances. ![Is-Your-Business-In-Financial-Distress](https://lanyana.revivefinancial.com.au/hubfs/DR%20Blog%20CTA%20Banner%20-%20Personal%20Debt%20Solutions.gif) ## How to Apply for a Debt Consolidation Loan Most major lending facilities will offer Debt Consolidation Loans. You need to be on the lookout for a loan which will make it worth your while to consolidate your debts so keep an eye open for low-interest rates, low fees and a little flexibility in case your circumstances change. If you already have a loan through a bank or finance company which is offering competitive rates they might be your first port of call. Many would welcome the opportunity to not only help you pay out your existing loan but lend you more money to increase their own profit margin. Do your research before you make any loan inquiries. Each time you enquire about a loan, that enquiry is marked on your credit file. Several enquiries in a short period of time might turn potential lenders away. Make a short list of two or three lenders and only enquire with one at a time. Once you have found your lending facility you need to know exactly how much you need to borrow to cover off your debt. You also need to look at your existing debts to determine if you will be hit with early exit fees. Once you have all the information required, get in touch with a financial professional and ask for help. [Positive Solutions Finance](https://positivesoutionsfinance.com.au/) can help you find a loan to suit your circumstances, even if you have a bad credit rating. ## What if a Debt Consolidation Loan Won't Help? If you wanted to use a Debt Consolidation Loan to help you get out of debt, but you don't think the savings will be worth it or your credit file is too badly impacted to be able to apply for finance, there are other options out there. Debt Rescue can help you with an informal Debt Agreement, a Part 9 Debt Agreement and budgeting advice. To talk to someone about your financial situation call [1800 003 328](tel:1800%2000%203328) today. For more information on Debt Consolidation, check out our [Debt Consolidation page.](https://debtrescue.com.au/debt-consolidation/) Topics: [Debt Consolidation](https://lanyana.revivefinancial.com.au/articles/tag/debt-consolidation) ## More Articles - Recent Articles - Debt Consolidation - Debt Agreements - Informal Agreements - Debt Relief - Bankruptcy - Budgeting - Business Debt - Credit File - Education - News - Research ### Subscribe Here! ### Get the Latest Debt Free and Budgeting Advice straight to Inbox Free ### Recent Posts ### If you are in too deep with debt, we here to rescue you. We have the right solution for your situation. Contact us today. No obligations, just solutions! ## Talk to an Aussie who cares. [Get Started](https://solutions.debtrescue.com.au/online-assessment-form) [![DR-Logo-v3-1](https://lanyana.revivefinancial.com.au/hubfs/DR-Logo-v3-1.png)](https://debtrescue.com.au/) **Affiliated with:** ![ias-white-logo](https://lanyana.revivefinancial.com.au/hs-fs/hubfs/ias-white-logo.png?width=250&height=118&name=ias-white-logo.png) **Member of:** ![pipa_logo_white](https://lanyana.revivefinancial.com.au/hs-fs/hubfs/pipa_logo_white.png?width=250&height=72&name=pipa_logo_white.png) [Privacy Policy](https://debtrescue.com.au/privacy-policy/) | [Terms of Use](https://debtrescue.com.au/terms-of-use/) © 2019 Debt Rescue. All rights reserved. Debt Rescue Pty Ltd is a company that is part of Revive Financial Group Pty Ltd (Group). All of our Australian Credit Licenced activities within our Group are undertaken by our related bodies corporate Revive Financial Lending Pty Ltd ACN 152 573 610, Australian Credit Licence 418721 and Revive Financial Pty Ltd ACN 621 446 697, Australian Credit Licence 503321 and Revive Debt Agreements Pty Ltd CAN 133 509 654, Authorised Credit Representative Number 452856 and Registered Debt Agreement Administrator Number: 1337. Liability limited by a scheme approved under professional standards legislation. ## What Kind of Debts Do You Have? ![](https://debtrescue.com.au/wp-content/uploads/2020/11/Credit-card-icon.png) Credit/Store Card ![](https://debtrescue.com.au/wp-content/uploads/2020/11/Personal-loan-icon.png) Personal Loan ![](https://debtrescue.com.au/wp-content/uploads/2020/11/Pay-day-loan-icon.png) Pay Day Loan ![](https://debtrescue.com.au/wp-content/uploads/2020/11/tax-debt-icon-green.png) Tax Debt ![](https://debtrescue.com.au/wp-content/uploads/2020/11/Unitilties-Icon.png) Utility Bill ![](https://debtrescue.com.au/wp-content/uploads/2020/11/other-icon.png) Other Please select at least one type of unsecured debt. Next ## How Much Money Do You Owe? $10,000 $1,000 $100,000+ Next ## Find Out How To Reduce Your Debt ### Your First Name ### Your Last Name ### Your Email ### Your Phone Phone number must be 10-digits long and begin with a 0. (e.g. 04 1234 5678) ### Your Post Code Post code must be 4-digits long (e.g. 4567) Some of your details appear incorrect. Please update the highlighted fields and re-submit. Submit ## Congratulations! ### You've taken the first step to becoming debt free Let's keep the momentum going and complete our assessment form to receive an instant debt analysis. [Start Instant Assessment](https://solutions.debtrescue.com.au/online-assessment-form) By submitting this form you acknowledge that you have read and accept our [Privacy Policy](https://lanyana.com.au/privacy-policy/)