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How to consolidate debt

Consolidating your debt can be a fairly simple process, and can occur by following a few simple steps: 

Step 1: Work out how much money you owe in total.

Step 2: Apply for a debt consolidation personal loan for this amount.

Step 3: If approved, the money will be paid directly to your credit provider to pay off your outstanding debts.

Step 4: Consider cancelling your old accounts (e.g. credit cards) to avoid running up further debt.

Step 5: Pay off your personal loan over the agreed term.

Start consolidating your debt

How much does debt consolidation cost?

Sometimes consolidating your debts can end up costing more in total than paying them off separately.

Firstly, there may be fees and charges to consider when you’re paying off your current debts. Check each lender’s terms, conditions and fine print to find out what’s involved.

Secondly, a debt consolidation personal loan may have a longer loan term than some of your other debts, such as credit cards. You should consider the loan amount, the loan term, and total amount payable when consolidating your debts.

Take a moment to consolidate your debt

How long does it take to consolidate debt?

Choosing a longer loan term can mean paying less from month to month, which can take some pressure off your household budget. However, it also means you’ll likely pay more in interest over the long term, even if your new interest rate is lower than those on your previous debts.

On the other hand, choosing a shorter loan term can mean your monthly repayments are higher, but you’ll be out of debt faster and pay less in total interest than with a longer term.

Before applying for a debt consolidation personal loan, make some calculations to work out how it will affect your budget and expenses. If you need more help, consider contacting an expert, such as a finance broker, accountant or similar adviser.

Consolidate your debt

Select the type of debt you want to consolidate