Debt Consolidation Loan Comparison – Find The Right One

Debt consolidation loan comparison is important for anyone looking to consolidate their debts. After all, consolidation loans may vary in their terms and rates, so finding the right one is paramount. Monzi is here to explain how to compare loans from different lenders, as well as our own service.

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 is debt consolidation loan comparison?

A debt consolidation loan comparison is the process of comparing different consolidation loans. Moreover, consumers do the research to pick a loan that’s right for them.

There are many ways to compare consolidation loans. For example, you may want to take into account:

  • comparison rate
  • affordability
  • convenience
  • early repayment costs.

What is a debt consolidation loan?

A debt consolidation loan is a loan that combines multiple existing debts, like personal loans or credit cards, into one repayment.

A consolidation loan can often simplify your life. Instead of having to make repayments on a variety of different loans each month, you simply make one. In addition, a consolidation loan may save you money on fees and charges.

How does a debt consolidation work?

Debt consolidation works by paying out all your existing debts with a different credit provider. Then, the consumer makes repayments on the consolidation loan until it is settled.

To be more specific, we’ll give you a working example:

Jack currently has two small loans out from different lenders, as well as a credit card. Each month, Jack has to remember three repayment dates. While he was managing at the beginning, Jack now finds himself struggling and falls behind on his repayments.

Jack decides to apply for a personal loan to consolidate debt. His lender approves his application. The credit provider then pays out Jack’s two loans and credit card debt. From here, Jack makes repayments towards his new personal loan until that is also settled.

His new loan has one repayment, one interest rate and one set of fees. As a result, Jack ends up saving money.

For more information, head to the Australian Government debt consolidation guide on MoneySmart.

What is a debt consolidation loan comparison rate?

A comparison rate is a figure that helps consumers get an idea of what their debt consolidation loan will cost. Specifically, they work by reducing the interest rate plus most of the fees and charges into one percentage figure.

Comparison rates are helpful because they give you a more accurate representation of the cost of a loan. However, it may not factor in all payable fees and charges.

All lenders are required by law to include a comparison rate; lenders are held to account and consumers can make informed decisions more easily.

After all, it can be difficult to compare loan products, especially if they are from different lenders. Comparison rates make this easy; however, there are other loan features to consider.

What other things should I consider during debt consolidation loan comparison?

Consumers should also consider things like affordability, repayment terms and convenience.

  • Affordability. Obviously, one of the main reasons to consolidate your debts is to save money. Therefore, it is paramount you confirm your new loan will be cheaper than your existing debts. In addition, confirm you can afford these new repayments, otherwise, you will face more debts.
  • Repayment terms. Does your new loan let you make early repayments for free? Moreover, are you afforded enough time to repay your loan in full? Keep in mind, many lenders will charge fees for early repayments. You may need to factor in this additional cost when you settle your existing debts.
  • Convenience. Is it easy to qualify for a consolidation loan? Do you receive a quick outcome? Finally, is your lender fully-licenced by ASIC?

What to do after comparing debt consolidation loan?

After you finish comparing loan products, you could consider the following:

  • Crunch some numbers to figure out how much you need to apply for. Remember to factor in any additional fees or charges (e.g. early payout fees).
  • Apply for your desired amount. Remember, lenders may not always be able to offer the amount you apply for.
  • Your new loan pays out all your existing debts.
  • Consumers make repayments on their new personal loan until it is settled. Assuming the consumer doesn’t take out any additional credit, they will be debt-free.

Do debt consolidation loans hurt your credit score?

Debt consolidations will not hurt your credit score if used correctly. In fact, a consolidation loan may even improve your credit score. This is because settling multiple debts into one payment is seen as a good credit listing.

Just like any loan product, however, they may hurt your credit if you miss payments or default on your loan.

Debt consolidation loan comparison – security

You should also take into consideration whether you wish to apply for a secured or unsecured personal loan.

Consumers will generally need to attach an asset as collateral against loans over $2,000. This is known as a secured loan.

Lenders require security against larger loans to guarantee the loanee will repay their loan according to their contract. If the borrower fails to do so, the lender can repossess their asset to cover some of their losses.

Lenders can generally accept the following as security:

  • car
  • caravan
  • motorbike
  • boat.

Keep in mind, you must be the registered owner of whatever vehicle you wish to use as security.

Business debt consolidation loan comparison

Debt consolidation business loans can help your business streamline its debts and potentially even save on interest. Despite this, it is important you compare the options available to you.

In particular, consider the following when shopping for the best deal:

  • loan terms
  • rates
  • fees
  • reputation of lender.

Moreover, your business should only consider consolidating their debts if:

  • the business has multiple existing debts
  • the consolidation loan is cheaper than the existing debts
  • you feel your business needs to borrow more.

Finally, businesses may be able to consolidate their debts through a line of credit, a business credit card or secured loan. Consolidation loans for businesses may not be available through Monzi.

debt consolidation loan comparison woman holding coffee

Can Monzi offer me a consolidation loan?

Monzi cannot offer you a consolidation loan directly, but we work with lenders that may.

See, Monzi is a lender-finder service. This means we try to match Aussie consumers just like you with a potential short term lender. This may save you the hassle of applying with multiple different credit providers. Instead, apply once with us and we’ll try to do the rest.

The lenders we work with may be able to offer the following personal loans:

  • Small personal loans from $300 to $2,000
  • Medium personal loans from $2,100 to $4,600
  • Large personal loans from $5,000 to $10,000.

Which is better between a personal loan and debt consolidation?

This is difficult to answer because they are not necessarily different. Specifically, debt consolidation is an umbrella term, whereas a personal loan for debt consolidation is a specific loan product.

Monzi works with lenders that may be able to offer debt consolidation personal loans up to $10,000.

Do I qualify for Monzi?

At Monzi, we keep our criteria as open as possible. This is because we want to help as many Aussies as possible. Therefore, there are only four criteria you need to meet to be eligible:

  • At least 18 years of age
  • Australian Citizen or Permanent Resident
  • Have a personal contact number and email address
  • Have 3 months of recent online banking history.

You’re ready to apply if you can say yes to everything above.

How do I apply?

One

To get started, scroll up to the loan slider at the top of the page and select the amount you’re thinking of applying for. The slider will show you estimates of repayments. These are just estimates, and should not be considered as a repayment calculator.

Two

Once you click apply now you are taken to the submission form. We only ask for essential information so this step shouldn’t take too long. Once we have all your information we can start trying to match you with a lender.

Three

If we successfully pair you with a lender, they will be in touch. Keep in mind, your application still needs to be assessed by the lender themselves. Lenders get in contact with a digital loan contract if you’re approved.

Debt consolidation loan comparison – what’s on offer

You will likely see a range of different consolidation loans advertised online. Monzi, in particular, works with lenders that might be able to offer the following:

Consolidation loanAmount (AUD)
Personal loan debt consolidation$3,000
Business debt consolidation loan$7,000
Credit card debt consolidation loan$10,000

Note, the above table is for demonstrative purposes only. The figures and terms presented are examples only, and may not reflect the loan you’re potentially offered.

Which banks do debt consolidation loans?

Monzi cannot speak on behalf of other entities, therefore we cannot say ourselves which banks are able to offer debt consolidation. Therefore, you will need to do your own bank debt consolidation loan comparison.

While we can’t make any guarantees, most banks will offer some sort of debt consolidation.

Can I get debt consolidation loans Australia with bad credit?

Yes, you may be able to get debt consolidation loans Australia with poor credit history. After all, the lenders in our network consider a whole range of criteria when assessing your application.

In other words, bad credit may not stand between you and approval. This is because your credit score is one out of a plethora of different criteria lenders assess. For example, lenders will also take into account your:

  • income
  • expenses
  • repayment history
  • saving habits
  • etc.

Therefore, bad credit is not the be-all and end-all of approval. In fact, it plays one part of the assessment process.

What happens if I fail to pay my secured loan?

As we mentioned, lenders may repossess your asset if you fail to repay your secured loan. Lenders have the legal right to do this; however, consumers are also protected in the event of a repossession.

For example, lenders can only start the process if:

  • you owe over $10,000; or
  • over 25% of your loan (whichever is higher).

Moreover, if you meet the above criteria, lenders can only repossess your vehicle if:

  • you are behind on your repayments
  • you have been sent a 30 day notice to pay the overdue amount
  • the consumer has failed to pay this amount or negotiate a resolution.

Will you conduct an employment check?

Monzi will not perform an employment check ourselves; however, the lender you’re paired with might.

Employment checks are a normal part of the assessment process. Moreover, lenders often have dedicated assessment teams, meaning it’s not their first rodeo. In other words, lenders always aim to perform employment checks professionally and discreetly.

Am I guaranteed approval?

You are not guaranteed approval with any lender found through Monzi. This is because every lender in our network takes their responsible lending obligations seriously.

Specifically, Australian law aims to prevent lenders from offering unsuitable loan products. In other words, the law requires lenders to make sure the loan product they offer is:

  • suitable for the consumer (their financial needs and objectives are met; and
  • affordable (the consumer can reasonably afford the contractual repayments).

Therefore, be cautious around any lender offering guaranteed approval.

Where do I go or advice if I’m struggling with debt?

You can get free financial advice if you’re struggling with debt. You can call the National Debt Helpline on 1800 007 007, or visit their website.

The earlier you seek help, the more options you afford. Financial counsellors are professionals and can help you with things like:

  • organising bills you’re struggling with
  • dealing with debt collectors
  • utility bills
  • general financial advice.

While Monzi does not offer financial advice, we can help you with questions about our application and service. To chat directly with a member of our customer service team, head over to hello@monzi.com.au.

Keep in mind, you will need to contact your lender directly if you have questions about them. All the lenders in our network are separate companies, meaning Monzi cannot speak on their behalf.

Ready to apply?

Scroll up to begin. Finding lenders might be easy through Monzi. Applying on our website is easy. After all, there’s no paperwork. Moreover, it only takes a few minutes to complete.

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Factor In

Costs

Two credit cards
Two credit cards

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

Terms

12 months

Costs

20% upfront establishment fee

+ 4% monthly fee

Example

Loan Amount of $1,000 over 6 months repayable weekly (25 weekly repayments). $1,000 (Principal Amount) + $200 (20% Establishment Fee) + $240 (fees based on 4% per month over 25 weeks) = $1,440 total repayable in 25 weekly installments of $57.60.

Under the current legislation, most small personal loan providers don’t charge an annual interest rate (you’ll know this as an APR) %. The maximum you will be charged is a flat 20% Establishment Fee and a flat 4% Monthly Fee. The maximum comparison rate on loans between $300 and $2000 is 199.43%. This comparison rate is true 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

Loan amount

$2,001 - $4,600

Terms

13 months

24 months

Costs

48% annual percantage rate

67.41% comparison rate p.a.

Example

Loan Amount of $3,000 over 18 months repayable weekly (78 weekly repayments). $3,000 (Principle Amount) + $400 (Establishment Fee) + $1,379.06 (reducing interest) = $4,779.06 total repayable over 18 months with weekly installments of $61.27.

The Interest Rate for Secured Medium Loans is 48%. The Typical Comparison Rate is 67.41% p.a. WARNING: This comparison rate is true 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. Click here to see a worked example.

Loan amount

$5,000 - $10,000

Terms

13 months

24 months

Costs

21.24% annual percantage rate

48% comparison rate p.a.

Example

Loan Amount of $10,000 over 24 months repayable weekly (104 weekly repayments). $10,000 (Principle Amount) + $5,577.12 (Interest) = $15,577.12 total repayable over 24 months with weekly installments of $149.78.

The Interest Rate for Secured Large Amount Loans is 48%. Maximum Comparison Rate is 48% p.a. WARNING: This comparison rate is true 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. Click here to see a worked example.