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Debt Consolidation loans

A debt consolidation loan could save you serious money.

The nmoni difference:

Debt Consolidation loans: What you need to know

A debt consolidation loan can be a great way to save money. But it’s important you understand how it works and what’s involved so that you make sure it’s the right decision for your situation.

Read on to get some valuable tips when considering a debt consolidation in Australia.

 

What is a debt consolidation loan?

Sometimes you might find yourself in a position where you have multiple loans at once. For example, you might owe money on two credit cards, have a ‘buy now pater later’ loan, a car loan and a personal loan.

A debt consolidation loan is where you roll up all of these loans into one easy to manage loan. Best of all, by combining your debts into one loan you can sometimes save money by getting access to lower interest rates and fees.

Let’s give you a real life example of a client we recently helped with a debt consolidation.

Our client had the following debts:

  • A bike loan owing $10,318.29 at 11.29% interest with 3 years remaining.
  • A personal loan owing $23,112 at 16% interest with 4 years remaining.
  • A credit card owing $2,500 at 19.99%.

Our client was paying $1,047.93 per month in repayments on this debt.

We searched for a debt consolidation loan from one of our lenders and, for direct comparison, found a 4 year loan with repayments at $946.97 per month and an interest rate of 10.19%.

That represents a saving of $100.96 per month and total interest savings of $1,334.47 over the 4 year term!

Because we also offer debt consolidation loans up to 7 years we were also able to offer this client a 7 year loan term with repayments of $621.28 per month. This reduced their monthly repayments by $426.65 per month which was one of their key objectives.

This is a great win for our client and will allow them to get into a better financial position more quickly.

Another real life example was a customer having 3 credit cards and rolling them into a personal loan, here are the savings:

  • A credit card with a limit of $10,000, balance owing $9,700 interest rate 24.99%.
  • A credit card with a limit of $4,500, balance owing $4,000 interest rate 18.99%.
  • A credit card with a limit of $10,100, balance owing $9,100 interest rate 19.99%.

Our client was paying $533.89 per month in repayments on this debt.

We are able to offer this client a 7 year loan term with repayments of $418.12 per month and an interest of 9.49%. This reduced their monthly repayments by $115.77 per month and total interest saved was $4,785.99!

 

What are the Pros and Cons of a debt consolidation loan?

Pros

Save Money

As shown in the example above, if you can get a lower interest rate when you consolidate your debts you could save a lot of money. Also, in many cases you are probably being charged a monthly or yearly fee for the loan. If you can just have one loan you might be able to save a lot of money in ongoing fees.

One simple payment

The big problem with having multiple loans is keeping track of when the payments are due. Consolidating down to just one loan will make it really easy and simple to manage the repayments.

Clarity around your debts

Having one loan means it’s easy to work out your current debt situation. If you have multiple loans it’s easy to lose track of your current situation because you have to add up the debts from all different lenders.

 

Cons

Costs

It’s important to factor in all the costs of changing your loans. Some lenders might have exit fees or other costs and you need to factor this in when considering if a debt consolidation loan is for you. We help our clients work this out when we assist them with a debt consolidation loan to ensure they are making the right decision.

 

3 tips when considering a debt consolidation loan

Tip 1: Do not shop around
Applying directly to lenders can negatively impact your credit score as hard checks are performed upfront.

Hard credit checks are a formal credit enquiry and therefore can drop your credit score.

Instead of applying to many lenders yourself, use an online loan service like nmoni. In minutes we can check your loan requirements with our panel of lenders who have the best and most competitive rates which can help you save serious money. Importantly, we won’t hurt your credit score.

Tip 2: Check the fees and charges
It’s important you understand all the fees and charges associated with a debt consolidation loan.

The reason this is important is that you may be lured by some lenders with a really low interest rate.

What you might not know upfront is that there are a lot of fees and charges associated with that new debt consolidation loan that make the rate effectively not very good.

So, while it’s important to ensure you are getting a great rate, you also need to be mindful of the other costs of the loan.

Also, make sure you understand any fee’s or charges associated with paying off the loans you are consolidating so you can make an informed decision.

We can of course help you with this because we lay out all of these fees and charges for our clients so that everything is transparent and there are no nasty hidden surprises. You’ll find it easy to compare your debt consolidation loan with your current loans because everything is fully disclosed. It’s just one of the advantages of using nmoni.

Tip 3: Secured or unsecured.
One thing to consider when getting a debt consolidation loan is whether you should get a secured or unsecured debt consolidation loan.

A secured loan is secured by an asset like a car or a boat. Secured loans typically have lower interest rates because they are less risky for the lender. Taking a secured loan may also allow you to borrow more money depending on your situation.

One thing to be mindful of is that if you default on your secured loan the lender may repossess the asset you put up for security.

An unsecured loan is the opposite of a secured loan in that you don’t have to put up an asset as collateral. Generally these loans have higher interest rates because there is more risk for the lender. The upside is that you don’t run the risk of losing your asset if you default.

We can help you make this decision depending on the asset you may have and your situation.

If you need help working out if a debt consolidation loan can save you money apply here. It takes less than 10 minutes to complete our application. You can then sit back and relax while we check your loan requirements with our top panel of lenders. Importantly, this process will not hurt your credit score.

Frequently Asked Questions

A debt consolidation loan is where you combine multiple loans into one loan. The key benefits are lower interest rates and fees (depending on your situation) and one simple, easy to manage repayment.

A personal loan is a sum of money a lender gives you that you repay over an agreed period of time plus interest and other fees and charges.

Personal loans generally range from $10,000 - $80,000 and the term of the loan ranges from 1 to 7 years (5 years is pretty common).

Secured Loans

A secured loan is secured by an asset like a car or a boat. Secured loans typically have lower interest rates because they are less risky for the lender. Taking a secured loan may also allow you to borrow more money depending on your situation.

One thing to be mindful of is that if you default on your secured loan the lender may repossess the asset you put up for security.

Unsecured Personal Loans

This is the opposite of a secured loan in that you don’t have to put up an asset as collateral. Generally these loans have higher interest rates because there is more risk for the lender. The upside is that you don’t run the risk of losing your asset if you default.

Debt Consolidation Loans

Debt consolidation loans are where you take one loan out to pay off your existing debts (multiple loans). If you get the right help, you can sometimes get a lower interest rate and fees than your credit cards or other loans. This means you’ll save money on interest and can hopefully pay off your loan faster. The other really big benefit is that you end up with one single monthly repayment rather than multiple repayments on different loans. This just makes it easier to manage.

Lenders focus on risk – that is the risk that you may not repay the loan. Lenders do assess people differently, which is why it’s important to shop around, but there are some general factors that most lenders look at:

  1. Your credit history. Lenders review your credit score and credit history to assess your ability to repay the personal loan.
  2. The amount of money you need. Lenders look at how much you want and your ability to repay (or service) the loan (what your income and expenses are). If you have excess funds after your expenses you may represent a lower risk.
  3. The term of the loan. If you need longer to pay off a loan may be a sign you aren’t in a strong financial position.
  4. The asset you are offering. To get a secured loan you need to put up an asset like a car, boat or caravan to support the loan. The value and type of this asset will affect if you qualify for the loan and the rate offered.

A secured loan can be used to buy a car (new or used), boat, caravan, motorcycle or even farm equipment! Some people use the assets they have as security to consolidate debts which can result in lower interest charges than they are currently paying.

The interest rate on a secured loan is really important but sometimes it doesn’t tell the full story about how competitive a loan really is. That’s because there may be significant fees and charges associated with a loan.

To help people compare secured loans the concept of a comparison rate was born. The comparison rate includes the interest rate PLUS all the other costs that come with the loan.

For example, let's say a lender is offering an interest rate of 3.99%. Sounds pretty good? The comparison rate for this loan may actually be 6.99% because there are set-up fees and monthly fees that significantly increase the costs associated with the loan. So make sure you take a look at the comparison rate of a secured loan so you get a feeling of the other costs involved.

Make sure you have the ability to make extra repayments on the loan you are considering. If so you’ll have the option to pay off your loan much quicker and potentially save a lot of money. We can help ensure you select a loan that allows additional repayments.

We have had secured loans approved in under 30 minutes when clients fully complete our fast online application. You can have the funds within 24 hours in some circumstances. Apply here to get started.

Absolutely and this can sometimes be a very clever strategy depending on your personal situation. This is commonly called debt consolidation and it’s where you take one loan out to pay off your existing debts (multiple loans). If you get the right help, you can sometimes get a lower interest rate and fees than your credit cards or other loans. This means you’ll save money on interest and can hopefully pay off your loan faster. The other really big benefit is that you end up with one single monthly repayment rather than multiple repayments on different loans. This just makes it easier to manage.

A credit score is a number generated by credit reporting agencies that provides an indication of your credit worthiness. A credit score is really important as they can significantly affect your ability to get a loan and how much that loan will cost (the interest rate and other chargers).

For more information on credit scores read our article "What is a credit score".

The exact formula is not disclosed by credit reporting agencies however there are several key factors that they consider like the amount of money you’ve borrowed, the number of loan applications you have made, your repayment history and any defaults, bankruptcies, debt collection agency agreements or short-term credit you have.

For more information on credit scores read our article "What is a credit score".

Yes, your credit score can affect the rate you are offered and how much you can borrow on a secured loan.

Typically if you have a really good credit score you’ll be able to get a low interest rate and have more lenders willing to borrow money to you.

But don’t despair if you don’t have a perfect credit score. There are a number of other factors that impact your ability to get a loan like whether you own a property or asset to provide security or not. That’s why it’s best to work with us as we know the lending policies of all the lenders on our panel which gives us the best chance of finding a loan that suits your circumstances. 

For further information on credit scores read some of our great articles like “What is a credit score?” and “How do I improve my credit score?”.

Through us! We have state of the art technology and an Australian based team that will quickly present you loan options from our large panel of lenders. We have a 4.9 Google rating from over 500 reviews so we think we can look after you! Apply here.

The higher your credit score the better your chance of getting a loan and the better chance you have of getting a lower interest rate. This is because if you have a really good credit score you are a lower risk to a lender and therefore are a good chance of paying back the loan. Conversely, if you have a lower credit score a lender may classify you as having higher risk and therefore charge a higher interest rate.

In addition to your credit score, other factors like overall banking conduct (such as dishonours and payday loans) can also impact the interest rate you are offered. 

At nmoni we do not perform upfront credit checks for our secured loans. This means that we can review your application and give you a guide as to whether a lender will give you a secured loan before a credit check is completed. Our process reduces the number of credit checks required and therefore helps you avoid hurting your credit score. Start the process today by completing our fast application.

This is really important as you don’t want to get a loan with a lender that charges high fees and has high exit costs. We only deal with reputable lenders so we can ensure you avoid any of these potential potholes. Also, make sure the lender or broker you use has high Google ratings (we happen to have a 4.9 out of 5 Google rating!).

Secured loans are amongst the easiest loans to get. That's where you put up something of value in exchange for funding. Car, boat and caravan loans are types of secured loans and means the lender has some security over the loan.

We can review your situation and provide feedback on why you are being declined without hurting your credit score. Apply now and we'll provide you valuable feedback.

Because we combine sophisticated technology with a highly skilled Australian team, we can quickly give clients feedback on their chances of getting a no credit check secured loan, the amount they can borrow and of course the interest rate. All without hurting your credit score by performing a soft credit check. Apply now to give us a test!

Many people can qualify for our loans with no upfront credit checks. This may include those with excellent credit to poor credit history and those who have been bankrupt in the past who are applying for car loans. Complete our quick application form and you’ll be on your way to a quick response. There could be more financing options available to you than you initially thought!

Simply complete our fast online application. Our technology will quickly guide you through the process. We will give you feedback on your loan application all without doing an upfront credit check.

real customer reviews

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4.9 Google rating
based on 500+ reviews

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After searching for a car loan I found nmoni. They are very helpful… keep you up to date at the progress of your loan. And made settlement a breeze. Thank you Chris and Michelle you are both amazing.

Jodie Bayliss

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Nmoni is such a great lending company, Christina is the best of best broker, person and very understanding. Great customer service and very helpful any time, she actually answers the phone unlike other company employers who do not care. She Actually cares and Christina does everything in her power to help and solve your issues. Thank you Nmoni and thank you Christina.

Mirjana Markovic

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Great loan company that really cares about its customers. Avoid big banks and get your loan requirements through Nmoni instead. You’ll get a much more caring a personalised service. Christina in particular was great!

Fabio Hawkins

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So easy to apply and well mannered and efficient staff make the process so easy.
Christina was so helpful. I will be letting friends know of this great service.

Christina Watson

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Christina was excellent. Prompt responses and kept me up to date during the whole process. Great to have someone take the time to review your current situation and not something that happened several years ago.

Scott McKenzie

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