What are the benefits of debt consolidation?

Have you maxed out your credit card? Are you struggling to repay a personal loan? Taken out a vehicle loan for a new car because the old one has finally given up the ghost? No matter what debts you’re struggling with, managing all of these at once can be a real test of your multitasking skills, let alone your sanity.

By consolidating your debts, you can make your life that much easier, and free yourself of the worries debts can bring. 

You’ll also save yourself some money along the way with a lower interest rate, and gain the advantage of a longer loan term so you can better manage your daily budget over the short, medium and long term. And the benefits of debt consolidation don’t end there:

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

Here’s 7 ways Debt Consolidation can benefit you

  1. Pay a lower interest rate.
    Debt consolidation loans are usually charged at a much lower rate of interest than all of your individual loans or other forms of debt, such as hire purchases or credit cards.
  2. Reduce your monthly repayments.
    With the average New Zealander now burdened with the weight of record levels of debt, chances are you’re paying hundreds if not thousands of dollars a month to a long list of various creditors. 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 very difficult to keep track of. A debt consolidation loan removes this constant hassle, instead giving you just the one end date for your loan and a repayment term that is often much shorter than that of your existing debts.
  4. Only one creditor to manage.
    Who do you owe money to? And how much are they owed? And when is the payment due? Did you transfer it to the right account? Multiple loans can be a hassle, as they each come with their own loan terms, conditions, rates and repayment dates. Daily life is enough of a hassle 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 life that much easier.
  5. Cut down on late fees and charges.
    Life’s a marathon. Not a sprint. Yet at times, you can find yourself running at a million miles an hour. And with so many creditors all asking for their payments, it’s not uncommon to forget one among the hustle and bustle. The resulting late fees, charges, as well as possible long-lasting marks against you on your credit report are an unnecessary hassle. With just the one loan, though? There’s nothing to forget as we will help your set up your repayments automatically.
  6. Improve your credit score.
    Your loans and debts are all recorded in your credit report, which is where your credit score comes from. By paying off all of your debts with a debt consolidation loan, these will be marked as paid on your credit report, in turn improving your credit score by showing financial institutions that you’re working to pay down your debts and pay off your loans.
  7. Become the boss of your debts.
    The story of Sisyphus is one that sees a man spending every day rolling a boulder up the side of a hill, only to have to wake up and do it all over again the next day. Day in, day out. Managing your debts can feel much the same. Day after day you do the best you can, but it often feels like you aren’t making any progress. Through debt consolidation, you don’t just end up paying less, it’s also that much easier to track the progress you’re making on the road to becoming debt free.

Want to know your options?

Use our debt consolidation calculator