If you're currently paying multiple debts, you would know that it can be challenging keeping on top of all your repayments. Debt consolidation is an easy way of managing your finances by taking out a new loan to pay off existing debts which could save you money and save your credit score!
How does debt consolidation work?
Debt consolidation is the process of taking out a loan to pay off a number of debts.
For example, if you had a $10,000 personal loan, $6,000 owing on a credit card and owed $3,000 in tax, you might consider debt consolidation as an easy way to manage just one loan repayment rather than multiple.
Consolidating your debts provides a number of benefits with the most obvious one being the peace of mind it provides in only having to manage one loan repayment. When you have three or four different debts, all at various amounts, repayment dates and interest rates, it can easily become overwhelming and stressful trying to keep organised and not fall behind in repayments.
Through reducing you're debts into one loan, you would also be minimising the risk of a late payment which could affect your credit score and future borrowing power with lenders.
Learn more about credit scores with our article What is a credit score and does everyone have one?
The second benefit of consolidating your debt is potentially securing a loan at a lower interest rate than your existing debts. Some debts, such as credit cards, can carry a high interest rate if you're not paying them off before the interest free period. By consolidating your debt to just one lower interest rate, you could potentially save hundreds or even thousands of dollars in interest repayments meaning its money back in your pocket, and who doesn't want that!
What debts can be consolidated?
You can use debt consolidation for a number of existing debts including:
- Credit cards
- Car loans
- Personal loans
- Store cards
- Tax debt
- Medical bills
- Buy now, pay later debt
- Education debt
Apply for an Auswide Bank personal loan to consolidate your debts. Use our Repayment Calculator to work our what your monthly repayments would be.
If you're an Auswide Bank customer and you're experiencing financial hardship, please contact us on 1300 138 831.
What are the key reasons to consolidate debt?
- Less stress managing one loan rather than multiple loans.
- With just one repayment to keep on top of, there is less chance of missing a payment which could incur late fees and affect your credit score.
- Will help you stay on top of your budget and simplify your cash flow.
- Potentially save money with a lower interest rate and possibly lower fees.
Auswide Bank Ltd Australian Credit Licence 239686 is the credit issuer. This is not an offer to lend – approval is subject to credit assessment criteria. Terms, conditions, fees and charges apply – full details on application. This information provides general advice only. We do not provide advice about this product based on any consideration of your personal objectives, needs or circumstances.