Debt Consolidation Loans
A consolidation loan offers to combine all of your existing debt into a single, more affordable monthly repayment – allowing you more financial freedom in your everyday life!
View Consolidation loan OffersConsolidation Loans to Reduce Your Debt – High-risk clients welcome
When you have multiple loans and credit agreements it can become very difficult to manage not only in terms of repayments but also in terms of affordability.
A consolidation loan will ensure you’re able to properly manage and afford your debts.
Table of Contents
- What is Debt consolidation?
- Consolidate your Debt using Credit cards
- Using a Home equity loan to consolidate your Debt
- Is a Consolidation loan the right option for me?
- How do I apply for a Debt consolidation loan?
- Do I qualify for a Debt consolidation loan?
- Avoid these Debt consolidation mistakes
- Does a Consolidation loan suit your requirements?
- Get professional help with your existing Debt
- List of direct lenders offering Debt consolidation
- FAQs on Debt consolidation
What is Debt consolidation?
A debt consolidation loan can help you take control of your debts and finances quickly and easily – you need to adopt an effective debt management solution as soon as possible.
It involves combining all outstanding balances on personal loans and credit cards into one account. In this way, you will be able to make a single smaller monthly payment, save money and lower your risk of defaulting.
The South African Government suggests a reliable debt consolidation strategy is to get a lower interest rate on a consolidation loan than you would be paying on interest across all your smaller loans.
Consolidate your Debt using Credit cards
One of the major benefits of debt consolidation is that it is flexible. It can be done in different ways so as to suit the needs of borrowers precisely. One of the simplest techniques involves the use of a low-interest rate credit card. You can transfer all of your outstanding debt to this card so that you can automatically eliminate the interest payments. You will achieve the highest possible savings by repaying your debt in full before the low-rate interest period expires.
Using a Home equity loan to consolidate your Debt
Another popular and effective strategy involves the use of a home equity loan for debt consolidation. You can transfer the balances on all of your current personal loans and lines of credit to your home loan balance or to a new home equity loan. That way, you will pay a much lower interest which is typical for a secured personal loan. You will have smaller monthly payments and save money. The only drawback is that if you default on the secured loan, your house may be repossessed.
Is a Consolidation loan the right option for me?
If you're experiencing serious difficulties repaying your debt and are accumulating more debt, you should turn to a specialist immediately. A debt counsellor or a specialised financial advisor will be able to provide the professional assistance which you require. The specialist will determine your current financial position and prepare an effective strategy for you to get out of debt.
How do I apply for a Debt consolidation loan?
You should make your loan application for debt consolidation right away after finding the right type of product for you. You will still have to undergo a credit check to ensure that you qualify. The lender will look into your income and monthly expenses to confirm that you will have a sufficient amount of money left for the repayment of the loan. You should be absolutely certain about the loan which you are applying for as making more than one application can cause considerable damage to your credit score.
If you're already blacklisted – you will need to seek information on obtaining a bad credit loan.
Do I qualify for a Debt consolidation loan?
You will have the best chances of approval for debt consolidation if the income you have left after covering your monthly expenses exceeds the monthly instalment on the loan. That way, the risk to the lender is much lower. Similarly, your credit history must be acceptable. People with bad credit or those that are blacklisted have a lower chance of getting approved. At the same time, most lenders are willing to approve applicants with a few blemishes on their credit records as long as they have been diligent borrowers otherwise.
If you have one or two late payments, for instance, you can expect to qualify for a consolidation loan but may have to offer some form of collateral to secure the loan. This is even more so for those who have a large sum of debt in the form of short-term loans and outstanding credit card balances.
Avoid these Debt consolidation mistakes
All consolidation loans come with closing costs, which you will have to pay out of your pocket. Usually, they are calculated as a percentage of the total loan amount. It is a mistake not to plan for the payment of these costs. It is best if you prepare the money in advance or notify the lender that these costs must be included in the loan amount if you have no other choice.
Does a Consolidation loan suit your requirements?
It is a mistake to accept loan terms that do not actually suit your financial circumstances, needs and goals. There is no point in consolidating your debt just to keep struggling to make that larger monthly payment. A study on consolidation loans suggests that the best strategy to adopt is to negotiate the terms of the loan so that it suits you. Most lenders are more open to negotiation than you think, especially when the demand for their credit products is fairly low. You can readily bargain for a lower interest rate, smaller monthly payments and a more flexible repayment structure.
Get professional help with your existing Debt
Before you apply for a debt consolidation loan, you must determine how much you owe currently, how much you will need to borrow and how you will repay the new loan. This is very difficult for someone who is not versed in finance and the risk of making a mistake is high. This is why you will benefit greatly from using debt review.
The financial counsellor will recommend the most effective method for debt consolidation in your case and will help you devise a precise plan for the repayment of the new loan so that you do not have to struggle with your finances.
The debt counsellor will also assist you in finding the most affordable debt consolidation loan and make sure that the repayments are tailored to your budget. This ensures that you will be able to get out of debt without excessive struggle.
List of direct lenders offering Debt consolidation
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Debt Rescue
- Free Debt Assessment
- Get a Rescue Plan
- ONE Affordable Payment
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Nedbank
- Loans up to R300,000
- Term up to 6 years
- Interest from 18.25%
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Debt Busters
- Protection against creditors
- Save on interest & fees
- Protect your assets
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Absa
- Rebuild your credit
- Get debt relief
- Lower interest rates
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National Debt A...
- FREE debt assessment
- Debt relief options
- Become financially free
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Capitec
- Loans up to R250,000
- Term up to 84 months
- Interest from 13.75%
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JustMoney
- Repair your credit score
- Get out of debt
- Credit life insurance
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African Bank
- Loans up to R350,000
- Term up to 72 months
- Interest from 15%
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FNB
- Loans up to R300,000
- Term up to 60 months
- Interest from 10.25%
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New Debt Plan
- Easy online application
- Manage your debt
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Letsatsi Financ...
- Loans up to R100,000
- Term up to 36 months
- Approval in 1 hour
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DebtMap
- Loans up to R100,000
- Term up to 60 months
- Lower interest rates
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Debt Therapy
- Easily reduce repayments
- Expert financial advice
- FREE consultations
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Negociate
- Your Money - Better Terms
- Increased cash flow
- Term up to 84 months
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SA Home Loans
- Affordability assessment
- Term up to 30 years
- Interest from 7.25%
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OneDebt
- Debt Consolidation Solutions
- Get debt RELIEF
- Save on interest
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Quick Consolida...
- BREAK the debt cycle
- Protect your assets
- Reduced payment
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Blue Oak System...
- RESET your debt
- Online financial services
- Easy online applications
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Lifestyle Finan...
- Loans up to R150,000
- Term up to 60 months
- Interest from 23%
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Debt.co.za
- Term up to 60 months
- Consolidate existing debt
- Interest from 20%
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My Financial He...
- Unsecured Loans
- Term up to 5 years
- Interest from 28%
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Pay Plan Soluti...
- Business Rescue
- Complete financial wellness
- Expert advice
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EC Finance
- Loans up to R120,000
- FLEXIBLE Repayment Options
- 90% approval rate
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Debt Eraser
- Free debt assessments
- Instant debt relief
- Reduced fees
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More Frequently Asked Questions on Debt consolidation
Can I consolidate with a bad credit score?
Dealing with debt can be quite challenging; especially when your credit score isn't great. But don’t lose hope! Some lenders will still work with you if your credit is poor; you might get stuck with higher interest rates and/or stricter rules. If you’re really struggling, debt counselling might be a better alternative than a loan. Its worth checking out to see what works for you.
Is debt consolidation the same as a personal loan?
A lot of people get mixed up and think debt consolidation is just a larger personal loan, but their not the same. Here’s the deal: a personal loan is like a multi-tool—you can use it for anything, like buying stuff or paying off debts. A consolidation loan, though, is made just for combining your debts into one payment, usually with terms that make things easier.
Will consolidation hurt my credit score?
I totally get why you’d worry about your credit score—it’s a big deal! When you apply for a consolidation loan, there’s a credit check that might lower your score a bit for a short time. But, if you keep up with payments, your score can actually get better over time. Its like taking a small step back to move forward.
What risks should I watch out for with debt consolidation?
Before jumping into debt consolidation, know what could go wrong. First, you might pay more interest overall if the loan stretches out longer. Second, missing payments can lead to big problems, like collections or court. And third, it’s easy to rack up new debt if you don’t close old accounts. Be mindful that, whilst consolidation can be helpful if used correctly, it can also be problematic if used incorrectly.
What if I don’t qualify for a debt consolidation loan?
If you can’t get a consolidation loan, don’t give up. Debt review (it’s free, by the way) can help you make a plan to pay off debts without hurting your credit more. You could also talk to creditors about lower payments or more time. Secured loans, like home equity loans, are an option, but watch out—if you can’t pay, you could lose your house.
How does the National Credit Act help me with debt consolidation?
In South Africa, the law’s got your back. The National Credit Act (NCA) makes lenders check if you can afford a loan before approving it, so you don’t get stuck with something you can’t handle. Stick with lenders registered with the National Credit Regulator (NCR) to know they’re legit. It’s all about keeping things fair for you. Check out the NCR website for more.
Can I consolidate debts if I’m unemployed?
Being out of work makes debt feel heavier, I know. But you might still have options. If you’ve got other income, like from investments or family, some lenders might work with you, maybe asking for collateral. Debt counseling’s often a better fit if you’re in a tough spot. It’s hard, but there’s ways to move forward.
What should I think about before getting a debt consolidation loan?
Before you sign up for a consolidation loan, take a breather. Add up all your debts, check the interest rates you’re paying now, and see if the new loan’s payments fit your budget. A lot of people think consolidation’s the answer, but sometimes it just stretches your debt out longer without saving much. Make sure it really helps you.
How do I find a good interest rate for a debt consolidation loan?
A good interest rate can save you loads. Here’s what I’d do: shop around and compare offers from different lenders. Check your credit score to know what rates you might get. Don’t be shy—haggle a bit! Lenders might give you better terms if you ask. Banks and NCR-registered lenders usually have decent rates, so start there.
Will debt consolidation get me debt-free faster?
Wondering if consolidation will clear your debt quicker? Well, it depends. It usually lowers monthly payments by stretching out the loan, which means you might pay longer. But if you can toss extra cash at it each month, you can pay it off faster. It’s really about staying disciplined with your payments.