What are the benefits of debt consolidation?

Have you maxed out your credit card? Are you struggling to repay money you've borrowed? Paying off that new set of wheels in the driveway? Juggling all of your debts can be a test of your multitasking skills, and your sanity.

By consolidating your debts, you can make your life easier and start living debt-free. 

You’ll also save yourself some money along the way with a lower interest rate, and gain the advantage of a longer repayment window so you can better manage your daily budget over the short, medium and long term.

The benefits of debt consolidation don’t end there:

Firstly, if you are wondering what debt consolidation is, you can find out here.

Here are 7 ways a debt consolidation loan could benefit you:

1. Pay a lower interest rate.

Debt consolidation loans are charged at a much lower rate than all of your individual loans or debts, such as hire purchases or credit cards.

2. Reduce your monthly repayments.

The average New Zealander is now burdened with record levels of debt. Chances are, you're one of them. By consolidating your debts with a personal loan, you’ll be left with just one easy-to-manage monthly repayment, which often equates to a lower amount than all of your individual loans combined.

3. Pay your debts off over a longer period of time.

Some of your loans may be due by the end of the month. Others, six months from now. Either way, they can be difficult to keep track of. A debt consolidation loan makes life easy, giving you just one monthly payment and a repayment term that is often much longer than your existing debts. 

4. Only one creditor to manage.

Multiple loans can be a hassle. Who do you owe money to? When is payment due? They each come with their own terms, conditions, rates and repayment dates. Juggling day-to-day life is difficult enough without the added stress of multiple creditors breathing down your neck, which is why consolidating your debts into the one loan is just so sensible. It’s predictable, manageable, and makes your life easier.

5. Cut down on late fees and charges.

Life’s a marathon, not a sprint. Yet you're probably running a million miles an hour just to keep up. It's easy to forget a payment when you're so busy. The resulting late fees, charges, as well as possible long-lasting marks against your credit report are an unnecessary hassle. With just one loan? There’s nothing to forget. Just mark the date in your calendar, and wave goodbye to late fees and charges.

6. Improve your credit score.

Your loans and debts are all recorded in your credit report, which is where your credit score comes from. Paying off your debts with a debt consolidation loan will mark these as paid on your credit report, which will improve your credit score by showing that you're a responsible borrower who can meet their monthly repayments. 

7. Become the boss of your debts.

Have you heard the story of Sisyphus? He spends all day rolling a boulder up a hill, only to wake up and do it all over again the next day. Day-in, day-out. If you're struggling with debt, you'll know how he feels. Even though you're doing your best, it can feel like you aren't making any progress. With debt consolidation you don't just pay less, it's also easier to make and track progress on your journey to becoming debt-free.


Want to know your options?

Try our debt consolidation calculator.

Apply for a debt consolidation loan?

secured loans from
9.9% p.a.*


minimum $2,000

affordability and credit score criteria apply

unsecured loans from
10.9% p.a.*


minimum $2,000

affordability and credit score criteria apply