Consolidating Debt with a Personal Loan: Does It Actually Help?

Feeling overwhelmed by juggling credit cards, car loans, BNPL and even store finance? Debt consolidation via a personal loan can simplify life and potentially save you money in Perth. But does it deliver?

What Is Debt Consolidation?

It means combining multiple high-interest debts into a single personal loan with a fixed rate and repayment schedule. By rolling everything into one, you deal with just one repayment instead of several.

Why Australians Consolidate Debt

• Over 50% of personal loan applications in Australia are for debt consolidation, with an average loan around AU $15,300.
• Faced with high living costs, many Aussies consolidate high-rate credit into a personal loan to ease cash flow pressure.

Benefits: What It Can Deliver

1. Lower interest rates: Many credit cards charge over 20% p.a., while debt consolidation loans can start around 7–8% p.a.
2. Simplified finances: One repayment, one due date, one rate to worry about.
3. Faster payoff timeline: With regular extra repayments, a set term loan helps eliminate debt sooner.
4. Credit improvement potential: Consolidating multiple accounts into one can streamline your profile and reduce delinquencies.

Things to Consider (Before Signing)

• Total cost: A longer loan term, even at lower interest, can add up to more interest over time.
• Upfront fees: Watch for application, establishment or early payout fees on your current debts.
• Spending discipline: Consolidation fails if you continue using credit cards after closing them.

Is Debt Consolidation Right for You?

It may help if you:

• Are managing multiple high-rate debts (eg. credit cards, BNPL, store cards).
• Want more control and clarity in your finances.
• Can commit to a realistic repayment plan and close old credit accounts.

When done right, consolidation can give you more breathing room and potentially save thousands every year.

Final Thoughts for Perth Borrowers

A well-structured consolidation loan can turn financial chaos into clarity. For residents in Perth, a local finance broker can help assess your exact interest rates and structure a plan that suits your income and budget. Consolidation isn’t magic, but it can be an effective tool if wielded carefully.

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