A debt consolidation loan is a personal loan that pays out two or more existing debts, leaving you with one repayment. Compare loans on the comparison rate, fees, term and the total amount you'd repay, not the monthly repayment alone. Bill consolidation loans are the same product under another name.
A debt consolidation loan is a personal loan that pays out two or more existing debts, so you're left with one repayment, one rate and one end date. Banks, credit unions and online lenders all offer them, however the loans themselves differ a lot on rate, fees and term, and depending on what you accept, the difference between two loans for the same amount can be thousands of dollars over the life of the loan.
For many people the hard part isn't deciding to consolidate. It's working out which loan is actually the cheaper one, when a dozen lenders' pages each show a different rate with a different asterisk. That's what this guide walks through. (If you're still working out whether consolidation is right for you at all, start with is debt consolidation right for you and come back.)
Compare them on four things: the comparison rate, the fees, the loan term, and the total amount you'll repay, not the monthly repayment on its own.
The advertised interest rate is only part of the cost. The "comparison rate" folds most fees into a single percentage (it's required by law to be shown wherever a rate is advertised for this kind of loan), so it's the better number for putting two loans side by side. A loan with a low advertised rate and a high establishment fee can carry a higher comparison rate than a loan that looked more expensive at first glance.
The loan term probably changes the answer more than you'd expect. A longer term lowers the repayment, however you're paying interest for longer, so the loan may cost you more in total. Below is the same loan on two different terms:
| Loan A | Loan B | |
|---|---|---|
| Amount borrowed | $20,000 | $20,000 |
| Rate (illustrative) | 11% | 11% |
| Term | 3 years | 6 years |
| Monthly repayment | ~$655 | ~$381 |
| Total repaid | ~$23,570 | ~$27,410 |
Illustrative example at an assumed 11% rate. This is not an offer, quote or advertised rate.
Loan B frees up ~$63 a week, which can be exactly what a tight budget needs, however it costs almost four grand more overall. Neither is wrong. What matters is choosing the term deliberately, knowing what the lower repayment costs you in total, rather than choosing a loan just because its monthly repayment is the smallest. The working-out for your own debts has its own guide: how much consolidation could cost or save.
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There's no single "low" that applies to everyone (rates are priced to your credit position, so the same lender can offer two people very different rates on the same loan).
That's also why it's worth reading "from" rates carefully. The rate an ad leads with is generally the one offered to applicants with the strongest credit profiles, and the rate you're offered may be higher. There's no official running average for personal-loan rates in Australia either, so the practical way to compare is the comparison rate on each loan you're considering, read against your own numbers.
So, rather than hunting the lowest advertised rate, the more useful question is "what rate would lenders actually offer me?", and you can answer a version of that before applying.
Pro tip: BrightMatch in WeMoney shows you loan options matched to your credit profile using soft checks only, so there's no damage to your credit file and no hard checks a lender can see.
They're the same product. "Bill consolidation" is the everyday name for the same thing: a loan that rolls what you owe, whether that's credit cards, a personal loan, Afterpay or Zip balances or an overdue bill or two, into one repayment.
A loan consolidates debts, though. If the problem is ongoing bills landing at awkward times rather than debt, that's usually a budgeting fix, not a borrowing one, and we've covered it in how to stop irregular bills sending you back into debt.
Three kinds of lenders, broadly:
Every legitimate lender among them holds an Australian credit licence, and each has its own criteria: some want near-spotless files, others are built for people whose credit has taken a knock. So, the same application can be declined by one lender and approved by another at a different rate. Being declined somewhere doesn't mean no lender will say yes, it means that lender said no at the time they assessed you.
Applying lender by lender to find out is the expensive way to learn this, because each full application sits on your credit file. The alternative is matching. WeMoney isn't a lender, it's a money management app with a matching service (BrightMatch) that shows you lenders from our panel whose criteria you may fit, before any application is made. You may qualify subject to the lender's own assessment.
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Sometimes (it's always down to the individual lender, and which lender matters more than usual here). Some lenders specialise in exactly this situation, and expect a higher rate to come with it. The realistic options, and the traps to skip, are covered properly in consolidating loans with bad credit.
A consolidation loan helps when the problem is too many repayments at rates that are costing you. It can't help when the repayments themselves are more than you can afford. If you're already unable to meet your repayments, a new loan is rarely the right first move. Your existing lenders have hardship teams whose job is to work out a change to your repayments with you, and the National Debt Helpline on 1800 007 007 is free, independent and confidential, and the financial counsellors there do exactly this work.
It's also completely fine to not consolidate: if your debts are small and nearly paid off, or the fees would be bigger than the saving, keeping your current setup and paying it down directly may be the better move.
Before you apply with any lender, it's worth five minutes on the checks in what to look for in a reputable debt consolidation lender, which covers licensing, comparison rates, fees disclosed up front, and what happens if things go wrong.
This article is general information only. It doesn't take your circumstances into account.
They can be, when the new loan's total cost beats what you're paying now and the single repayment helps you stay on track. They can also cost more than staying put, usually through a longer term or fees. The full pros, cons and risks are in is debt consolidation a good idea.
There's no single threshold. Each lender sets its own criteria, and your score is only one part of what they assess (income, expenses and repayment history all count). A stronger score generally means more lenders and better rates. You can check your score in WeMoney first, for free, with no damage to your credit file and no hard checks a lender can see.
Often, yes (each lender decides which debt types it will consolidate). Cards and personal loans are widely accepted, and "buy now pay later" balances depend on the lender. Here's how consolidating cards, BNPL and loans together works.
A full application does, because it's recorded on your credit file as an enquiry. Checking your own score, or being matched to lenders with soft checks, is not an application for credit. The detail is in does debt consolidation affect your credit score.
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