Consolidation Loans Guide – A to Z

Consolidation loans may be an option worth considering if you find yourself struggling with multiple different debts. If you aren’t sure what they are, don’t stress. We’ll explain exactly what consolidation loans are.

Monzi is a lender-finding service. We do not offer financial advice. Consider seeking independent legal, financial, taxation or other advice to check how the information and ideas presented on this website relate to your unique circumstances.

What are consolidation loans?

Consolidation loans are loans that combine a number of existing debts into one payment. Moreover, you can reduce the stress of dealing with several different rates, fees and repayment dates.

Loans for debt consolidation work by paying out your existing debts. Then, the consumer only has one lender to repay.

Many consumers consider consolidation loans because they can simplify your life. There are, however, additional benefits, including:

  • potentially saving on rates and fees
  • having only one repayment cycle to keep track of
  • potentially improve your credit history.

What are bad credit debt consolidation loans?

These debt consolidation loans work just like any loans for consolidation, except they are available to consumers with bad credit history.

You may find yourself looking for bad credit loans for a number of reasons, including:

  • missed or late payments
  • defaults
  • court orders
  • debt agreements.

A poor credit record may make approval from traditional lenders difficult. Traditional lenders may include credit providers such as banks or credit unions who may not offer loans for bad credit. Therefore, alternative options may be worth considering.

What kind of debts can I consolidate?

There is a number of different types of debt you can consider consolidating. The most common types, however, are:

Personal loansPayday loans
Credit cardsCar loans

The great thing about these loans is you can consolidate multiple different loan types; it doesn’t matter if you have two payday loans and a credit card, or two credit cards and a car loan.

Is it possible to get unsecured debt consolidation loans?

Yes, it is possible to get an unsecured loan to consolidate multiple debts. Therefore, lenders will base their assessment on your income, expenses and past repayment history.

Obviously, unsecured loans are not backed by any sort of asset belonging to the borrower. Moreover, lenders have no asset to repossess in the event of a failed loan. Unsecured loans, as a result, are seen to be riskier for lenders than secured personal loans.

Due to this added risk, lenders are likely to scrutinise your application more than if it were a secured loan. Approval may become more difficult, especially if you have a poor credit score or bad repayment history.

How do personal loans for debt consolidation work?

Personal loans for debt consolidation work the same as any form of consolidation. In other words, you use this new loan to settle existing debts.

Once your existing debts are settled, you move forward with making one regular repayment on your new personal loan.

Finally, be aware that personal loans can come as both secured and unsecured. To be eligible for a secured loan, you will need to be the owner of one of the following assets:

  • car
  • caravan
  • motorbike
  • boat.

Do consolidation loans hurt your credit score?

Consolidation loans may actually improve your credit score if you handle them correctly.

After all, the main premise behind debt consolidation is settling on-going consumer debts. Settling debts is seen as good credit behaviour. As long as you consistently make repayments towards your new consolidation loan in time, your score may be improved.

Obviously, however, poorly handled debt consolidation will negatively impact your credit score. Therefore, it is important you always confirm your new loan will be cheaper than your existing debts. If not, your credit score may be knocked even further, or you may even enter into a debt spiral.

Is it a good idea to get a consolidation loan?

It may be a good idea to get a consolidation loan if you are sure it will save you money and simplify your life. On the other hand, it is likely not a good idea to get a loan if the reverse is true.

More specifically, consider the following before you apply:

  • Will you save? Obviously, the affordability of consolidation is a factor worth considering. Confirm the new loan you take out is cheaper than paying off existing debts. Otherwise, you run the risk of falling deeper into debt.
  • What will it cost me? Confirm whether your existing debts charge additional fees for early repayment or not. If so, you will need to factor these charges into your calculations.
  • Who is my new lender? It is always a good idea to confirm your consolidation lender is fully licenced by ASIC and legally able to operate in Australia.

Pros and cons of consolidation

As we mentioned, consolidating your debts may be a great option in certain situations; however, they may not be for everyone. So, to give you a better idea, here are a few major pros and cons of consolidation.


  • Simplify your life by having one, simple repayment to remember each week.
  • Potentially save you money by reducing overall payments and costs.
  • No longer being pestered by debt collectors.


  • Failure to make repayments may increase your debt.
  • May need to pay fees for settling your existing debts early.

Debt consolidation loans for Centrelink customers

Swimming in debt whilst being on Centrelink can rapidly send your financial worries through the roof. A personal loan for consolidation, in some situations, may ease this stress by simplifying repayments and potentially saving you money.

If you do receive Government benefits, lenders may be willing to consider your application. You will, however, need to be earning a sufficient income.

Ultimately, you should consider all other options before taking out new credit if you are struggling with debt while receiving benefits. Specifically, consider seeking professional financial advice.

You can get in touch with a free financial counsellor by calling The National Debt Helpline on 1800 007 007. Keep in mind, the line is only open from 9.30 am to 4.30 pm Monday to Friday.

Can I get consolidation loans if I’m unemployed?

When you’re unemployed, it’s often difficult to access credit. After all, lenders will likely question your ability to afford repayments. Having said this, though, it may still be possible.

In short, if you’re after a loan as an unemployed individual, then you must show that you are earning some type of regular income. For instance, this could potentially include Centrelink benefit payments. Without income, your application will be ineligible and you won’t be offered a loan.

One thing to keep in mind is that if you lose your job and can no longer afford your debt repayments, then it may be wise to contact your lender and submit a financial hardship application rather than apply for a debt consolidation loan.

Where can I find guaranteed debt consolidation loans for bad credit?

You shouldn’t be able to find guaranteed loans for debt consolidation anywhere. Anywhere legal, that is.

All credit providers operating in Australia must take steps to ensure they are lending money responsibly. More specifically, these obligations have been outlined by The Government in chapter 3 of the National Consumer Credit Protection Act 2009.

In short, this act aims to protect Australian consumers from entering into unsuitable loan products. Therefore, all credit providers are expected to:

  • inquire into the applicant’s financial situation, requirements and objectives;
  • take steps to confirm the borrower’s financial situation for themselves; and
  • make an assessment as to whether or not the loan product is suitable for the consumer.

To cut a long story short, offering any sort of loan with guaranteed approval is illegal. Therefore, avoid any credit provider that offers this. There is a chance they may be a scam.

Consolidation loans calculator

Before jumping into your application, it’s often a good idea to understand how a consolidation loan would look for your circumstances. That’s where a loan calculator for debt consolidation can come in handy. In short, these calculators are offered for free online by a range of financial institutions and lenders.

Using them is easy too. Just enter the details of your current outstanding debts as well as some key features of your preferred loan. From there, you may receive an estimate of the amount that you need to borrow and your potential repayments.

You can then use this information to determine whether or not consolidation loans are the right choice for you. Consider how the repayments would suit your current budget and whether or not it would reduce your ongoing interest costs. However, remember that any figures provided are estimates only. Your final repayments and costs may vary if a lender offers you a loan.

Consolidation loans life buoy floating on water

Can Monzi get me a loan to consolidate my debt?

Monzi cannot offer you a consolidation loan ourselves, however, we may know a few lenders that can. See, Monzi is a lender-finder service, and a good one at that!

What we do is try to make life easier for everyday Aussies. Specifically, we try to simplify the way consumers access lenders online. Instead of applying with multiple different lenders, you can apply once with Monzi and let the lenders come to you.

If you match with a lender, they’ll first assess your application and send through a contract if you’re approved. Monzi works with lenders potentially able to offer personal loans for debt consolidation up to $10,000.

How do I combine all my debts with Monzi?

As we mentioned, you may be eligible to consolidate your debts with one of the lenders from within our network. While we can’t guarantee you will be approved, we do work with lenders that are willing to offering personal loans for bad credit.

To give you a clearer idea of how to apply, we’ll run you through the process step-by-step.

Step one

Consumers must first head to our website to begin. From there, select the amount of money you wish to borrow. Remember to calculate how much money you need to consolidate your debts successfully. Once you make a selection, click apply now.

The next screen will show a number of different loan options, from bills to travel expenses. If you are looking to consolidate, make sure you select the loan consolidation option.

Step two

The application now takes you to the submission form. Here we need a few pieces of information from you, so we can compile your application. Don’t stress though, we only ask for the important stuff, so applying for quick loans shouldn’t take long.

Step three

Once you successfully submit your application, you can sit back and relax. If we pair you with a lender from our network, they will first assess your application and get in touch if they can make you an offer.

Remember to always read through your contract thoroughly before approving anything. In particular, make sure you are happy with the loan amount, repayment terms and any additional fees and charges.

Am I eligible to apply with Monzi?

You are eligible to apply with Monzi if you meet the following criteria:

  • at least 18 years old;
  • hold an Australian Citizenship or Permanent Residency;
  • have a personal contact number and email address; and
  • have an online banking account with at least 90 days of recent banking history.

When will I receive an outcome?

The beauty of our 100% online business model is we can help heaps of Aussies – and fast!

If you apply with Monzi during normal business hours, you may receive an outcome within 60 minutes. If you’re paired with a lender, outcome times may vary.

Despite this, there are a few things you can do to put yourself in the best position for a quick outcome:

  • Aim to provide all relevant information when you first apply. If you forget to include an important piece of information, the lender may need to pause assessing your application.
  • Keep your phone and emails handy closeby. The faster you respond to questions and requests, the quicker the lender is able to provide an outcome.

Will I receive the cash on the same day that I apply?

It may be possible to receive your cash on the same day. However, Monzi cannot guarantee if this will occur.

If we pair you with an available lender, then they will be in touch to assess your application. With this, there will be some processing time involved as your lender looks to determine whether or not the cash loan that you’ve applied for is suitable for your circumstances. Once this assessment concludes, they will provide you with an outcome.

If your application is approved and you sign the contract, your lender will then transfer your cash to you. At that point, when you can access it will be determined by the associated interbank transfer times.

So, while if everything goes it plan same day loans may be possible, we cannot always guarantee if they will be offered to you. As a result, it’s often a good idea to expect a waiting time of up to one business day.

Debt consolidation loans for bad credit online decision

Monzi’s lender-finder service is 100% online. As you can tell, we love technology as much as you do. Therefore, applying on our site is super easy.

Our system is often able to digitally access a lot of the information we need. For example, lenders use the last 90 days of your bank statements to help them make a decision whether or not to offer you money.

In the past, consumers would need to provide physical copies of their bank statements. These days, it’s all digital. In fact, all you need to remember is your normal online banking login. From there, our system digitally pulls the information we need.

If it’s security you’re worried about – don’t be. Monzi is protected by both Comodo and McAfee, two giants of internet security. Therefore, your details and information are always kept safe and secure.

Why do I need to compare consolidation loans?

While strictly speaking, you may not need to compare personal loans. It’s never a bad idea. By shopping around, it may be possible to find a lower rate or more favourable terms that could make a loan more manageable for you. At the end of the day, you have little to lose by considering a range of options.

As a guide, aim to compare the following points:

  • How much can you borrow: Monzi works with lenders offering loans for debt consolidation from $300 to $10,000. However, not all lenders will offer this range of loan amounts (i.e. some may only offer small loans). As a result, before applying, ensure that you can apply for the amount you require.
  • The costs: your loan costs are typically made up of interest payments and fees. One easy way to compare costs is to look at the comparison rate. It rolls your rate and fees into one easily understood figure that represents your annual costs.
  • The lender: you must ensure that you are applying with a licenced credit provider. Not only that, make sure that you read reviews online to get an idea of how they’ve treated past borrowers.

What credit score do I need for a consolidation loan?

In short, it varies.

Most lenders will impose some kind of minimum credit score requirement. However, some lenders are more prepared than others to consider offering loans for debt consolidation to bad credit applicants. As a result, the credit score required by some lenders may be lower than others.

In any case, remember that meeting the credit requirements won’t automatically mean that your application is approved. After all, lenders must assess your financial situation too in order to determine whether or not the loan is suitable for your circumstances. As a result, approval is never certain and is contingent upon several factors.

What other consolidation options are there?

While we’ve gone in-depth on personal loans for debt consolidation, they are not the only option. As a result, depending on your financial situation, one of the following options may be a better choice for you.

Firstly, you could consider a credit card debt consolidation via a balance transfer if you are struggling with credit card debt. This involves transferring your current debts onto a new card, typically at a lower rate. As a result, you’ve only got to manage one credit card. Moreover, you may be able to take advantage of lower introductory rates to reduce your costs.

In addition to this, if you are a homeowner, then you may be able to refinance through your mortgage. In other words, you can potentially add some, or all, of your current debt onto your existing home loan. However, consult with your bank or lender to determine if this is an option.

Ultimately though, keep in mind that Monzi is unable to provide advice. It is simply up to you to select the option that is best for you.

What is the smartest way to consolidate debt?

In short, that depends on your financial situation. As a result, you must evaluate your current circumstances as well as your outstanding debts and compare consolidation options to determine which is right for you.

On the one hand, a personal loan for debt consolidation could make sense if you have several outstanding loans. On the other hand, if you’re struggling with credit card debt, then there may be a credit card balance transfer option that suits you.

At the end of the day though, Monzi is unable to say which is the smartest option for you. It will simply come down to your unique financial situation.

Can consolidation loans save me money?

Yes, potentially.

When done correctly, consolidation loans should save you money or at the very least, they should not increase your costs. After all, taking out a loan that is more expensive than the debts that you are currently repaying would be unwise, no matter how much easier it made your repayments.

Given this, before agreeing to your loan, make sure that you consider the costs. Look at the rates and charges applied and calculate whether or not your total loan charges would be reduced.

What questions should I ask before applying for consolidation loans?

While consolidation loans might seem like the quickest way to simplify your current debt repayments, it’s important not to dive in without first considering how they suit your circumstances. With this, there are a number of questions that you must ask yourself to determine if they are an option for you.

These questions may include:

  • Can I repay my current debts early and are there any early-exit fees that are associated with this?
  • How much do I currently owe and how much interest do I pay?
  • Will my consolidation loan save me money and reduce my current interest payment?
  • What repayments can I afford based on my current budget?
  • How will I avoid falling into debt again in the future?

How do I make repayments?

Many people consolidate their loans because they struggle to keep up with multiple repayment cycles. Well, once your debts are rolled into one payment, things should become a little easier.

Lenders generally set up a direct debit from your account. Therefore, your repayments are automatically deducted on a regular cycle. Having enough money in your account each cycle is the only thing you need to remember. Finally, the direct debit stops once your debts have been settled.

I can’t afford a repayment

If you are concerned you cannot afford an upcoming repayment, get in contact with your lender as soon as you can. If you provide enough notice, lenders may be able to cancel or reschedule your payment according to your contract.

Finally, let your lender know ASAP if you have a major change in circumstance. For example, if you lose your job your ability to afford your repayments is affected. Let your lender know of your change in circumstance and you may be offered a hardship payment plan.

In general, always be honest and upfront with your lender. Otherwise, you may find yourself struggling with debt once again.

Who can I talk to about consolidation loans?

If you are unsure about whether or not a consolidation loan is right for your circumstances, then it’s often a good idea to seek qualified financial advice. These experts will be able to inspect your current situation and evaluate your debts to help you chart a path going forward.

As we’ve already mentioned, the National Debt Helpline is a great free resource that can be a useful starting point. Alternatively, you may prefer to contact another qualified professional who may specialise in providing debt solutions.

In addition to this, don’t be afraid to do your research online. There plenty of online resources that can provide a useful starting point as you look to work your way out of debt. The Australian government’s Moneysmart website, in particular, has many pages that may be relevant to you.

Why should I apply with Monzi?

At Monzi, we aim to make it quick and easy for Aussie borrowers to find lenders online. All you need to do is submit an application and our system will set about trying to pair you with a lender. If you apply during business hours, then this may take as little as 60 minutes. Sounds good, right?

If this is not enough to convince you, though, that’s okay. There are a host of other benefits that you might experience if you apply with Monzi’s lender-finder service. Check them out:

Easy applications

At Monzi, we’ve made sure that it’s easy for you to submit an application. All you need to do is select your loan amount and repayment term (if applicable) and then enter some personal details. It’s so simple that you could potentially have it completed before you know it. As a result, you can get back to doing the things that you want to be doing sooner.

Fast outcomes

If you apply with Monzi during business hours and provide all the necessary information, then we may be able to pair you with an available lender in just 60 minutes. From there, they will be in touch to begin your assessment. Best of all, they will often work fast to try and provide you with an outcome ASAP. As a result, you may be able to receive the cash you need before you know.

However, keep in mind that approval is not certain.

A transparent process

We’ve outlined exactly what will occur at each step along the way. That way, you can rest assured knowing how your application may progress. After all, we don’t hide anything from you.

In addition to this, the lenders that we work with share this commitment too. If you are approved for a loan then you will be sent a contract. Within this contract will be all the fees, rates, repayments and costs associated with your loan. As a result, as long as you read it carefully, you won’t encounter any surprises down the line as you’ll know exactly how much you need to pay.

A safe and secure system

Monzi’s enlisted the help of cyber-security experts McAfee and Comodo to protect our online system. As a result, your information is safe with us. Moreover, it will only ever be viewed by those people that need to see it. This is great for peace of mind given the anxiety that often comes with sharing your information online.

Available Australia-wide

As long as you meet our eligibility criteria listed earlier, Monzi is available to Aussies all over the country. From the tip of Cape York to the bottom of Tasmania, from Western Australian all the way across to Queensland, Monzi is there for you. All you need is an internet connection and a few spare minutes.

In addition to this, Monzi’s website is always live so you’re able to submit a loan application 24/7. That means that you can apply at the time that suits you best, from wherever you like. Just keep in mind that if you apply outside of normal business hours then your outcome may be delayed.

Need help?

Do you have more questions? you may be able to find the answers in our FAQs section.

Alternatively, you can reach out to our team directly at; we’re happy to walk you through any and all questions you may have.

Just remember, our team needs their sleep too! So, if you email us outside of normal hours, there may be a delay. Don’t worry though – we’ll reply ASAP! Also, we can’t really talk on behalf of other lenders. So if you have a query about a lender, get in touch with them. They will be able to help you!

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Factor In Costs

You won't use a penny to apply for our lender-finding service, but here's some costs you could expect from a lender

Loan amount

$300 - $2,000


12 months (minimum)

12 months (maximum)


20% upfront establishment fee

+ 4% monthly fee


Representative example based on a loan of $1000 over 6 months a borrower can expect to pay a total of $1440.

Disclaimer: Under the current legislation, all Small Amount Credit Contract loan providers don’t charge an annual interest rate. The maximum you will be charged is a flat 20% Establishment Fee and a flat 4% Monthly Fee. The comparison rate on loans between $300 and $2000 could be up to 199.43%. The minimum loan term is 16 days and maximum loan term is 12 months. Representative example based on a loan of $1000 over 6 months a borrower can expect to pay a total of $1440. WARNING: This comparison rate is valid only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate with the lender that finances your loan.

Loan amount

$2,100 - $4,600


13 months (minimum)

24 months (maximum)


47.8% Annual Percentage Rate (APR)

65.85% Comparison Rate p.a.


Representative example based on a loan of $2500 over 24 months a borrower can expect to pay a total of $4,556.88.

The maximum interest rate for a Medium Amount Credit Contract is 47.8%. Comparison Rate 65.85% p.a. The maximum loan term is 24 months. Representative example based on a loan of $2500 over 24 months a borrower can expect to pay a total of $4,556.88. WARNING: This comparison rate is valid only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate with the lender that finances your loan. Credit criteria and terms and conditions apply.

Loan amount

$5,000 - $15,000


13 months (minimum)

24 months (maximum)


17% Annual Percentage Rate (APR)

36% Comparison Rate p.a.


Representative example based on a loan of $10,000 over 36 months a borrower can expect to pay a total of $16,489.

The starting interest rate for a Personal Loan is 17%. Comparison Rate 36% p.a. The maximum loan term is 24 months. Representative example based on a loan of $10,000 over 36 months a borrower can expect to pay a total of $16,489. WARNING: This comparison rate is valid only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate with the lender that finances your loan. Credit criteria and terms and conditions apply.