24/10/2022 · Last update: 11/04/2026

• Managing Debt

Consolidation Loans – 5 Reasons It’s Your Best Way To Get Out Of Debt

Consolidation loans are usually given by a lender that will take control of your debt and collect payments from you, and then make all the payments to your creditors on your behalf, giving you immediate financial relief. You’ll then only have a single payment to make that you can afford on a new loan. It’s useful if you defaulting on a lot of different debts with different terms and interest rates from different creditors.

What is Debt Consolidation?

Debt consolidation is the process of taking out a new loan to pay off multiple debts instantly. This can be an effective way to get out of debt because it can lower your monthly payments, improve your credit score, and save you money on interest.

There are two main types of debt consolidation in New Zealand: consolidating with a personal loan from Quickloans, or consolidating with a balance transfer credit card.

• Personal loans for debt consolidation can be obtained from Kiwi online lenders such as Quickloans, Crester Credit, etc. The interest rate on a personal loan will sometimes depend on your credit score and repayment history, but personal loans typically have lower interest rates than credit cards.

• Balance transfer credit cards offering 0% for a promotional period, usually 6-12 months. This can be an effective way to consolidate debt because you can save on interest and pay off your debt faster. But make sure you understand the terms of the balance transfer before you apply. Some balance transfer cards have fees that can offset the savings you’ll get from the 0% APR offer.

Why Should You Consider Debt Consolidation?

Debt consolidation is one of the most effective ways to get out of debt. By consolidating your debts, you can get a lower interest rate, which will save you money over time. Additionally, consolidating your debts can help you get out of debt faster by reducing the number of payments you have to make each month.

If you’re struggling to make ends meet each month and are tired of feeling like you’re trapped in a never-ending cycle of debt, getting fees for missed payments, and your debt seems to be growing, not reducing each month, then consolidating your debts may be the best solution for you. Not only will it save you money in the long run, but it can also help reduce the amount of stress you feel.

To get a debt consolidation loan from Quickloans, you must be a New Zealand resident and at least 18 years of age. You’ll also need to provide a suitable form of security.

If you’re interested in consolidating your debts, then please don’t hesitate to get in touch with Quickloans today. We’d be more than happy to discuss your options with you and help you find the best solution for your financial needs.

Who Should Use Debt Consolidation?

Debt consolidation tends to work best in a few specific situations:

You are carrying balances across three or more active debts — credit cards, store finance, BNPL, or small personal loans — and the combined interest and fees are eating into your ability to pay them down.

You are missing payments not because you cannot afford the total, but because you are managing too many due dates, accounts, and minimum amounts. A single repayment on a fixed schedule removes that complexity.

Your credit score is deteriorating because of missed or late payments, and you need to stop the damage before it gets worse. Consolidating into one loan you can comfortably service lets your credit file start recovering.

You can use the Quick Loans Debt Consolidation Calculator to model different amounts and repayment terms before applying.

When Consolidation Does Not Help

Consolidation is not the right move in every situation.

If the underlying spending problem has not changed, consolidating credit card debt but continuing to use the cards means you end up with the consolidation loan plus new credit card debt on top. The accounts you pay off should be closed or frozen — this is the single most important rule of consolidation.

It also may not help if the new loan extends the term so far that you pay more in total interest, even with a lower weekly repayment. A lower payment can feel like relief, but if you stretch a two-year debt over five years, the total cost may be higher. Always compare the total cost of the new loan against the total remaining cost of your existing debts — not just the weekly amount.

And if you only have one small debt, a consolidation loan adds an establishment fee and a credit enquiry for no real benefit. In that case, it is usually better to negotiate a payment plan directly with the creditor.

How Does Debt Consolidation Work?

Debt consolidation is the process of combining multiple debts into one single debt. The lender pays off your existing debts on your behalf, which can immediately start improving your credit score — or at the very least, stop it from deteriorating further.

If you’d like to check your own credit score, check it here.

https://www.centrix.co.nz/my-credit-score/

There are many benefits to consolidating debt, including:

• Reduced interest rates: When you consolidate debt, you may be able to get a lower interest rate on your new loan. This can save you money over time and help you get out of debt faster.

• One monthly payment: Consolidating your debts into one loan means you’ll only have to make one monthly payment. This can simplify your finances and make it easier to stay on top of your payments.

• Improved credit score: Making on-time payments on a consolidated loan can help improve your credit score. A higher credit score can lead to better interest rates on future loans and lines of credit.

• Reduced penalties: If you were defaulting on your previous loans because you couldn’t afford them, the new loan will usually be a lesser amount each week to pay and assuming you make all payments, you’ll avoid penalty fees.

If you are in a financial hole that keeps digging itself deeper, then please connect with us as soon as possible. Our Quickloans staff can assess your situation and give the best advice possible. If consolidation loans are right for you, then within just a few days, your stress could be dramatically reduced and you’ll be on your way to improving your credit file.

Frequently Asked Questions

Q: Can I consolidate Buy Now Pay Later debt?

Yes. BNPL balances from services like Afterpay or Zip can be included in a consolidation loan. These are among the most common debts people consolidate because the fees and late penalties add up quickly.

Q: Do I need to own a house to get a consolidation loan?

No. A consolidation loan can be secured against a vehicle or other asset. Property is not required, although it may allow you to access a higher amount or a lower interest rate.

Q: Will consolidation affect my credit score?

The new application creates a hard enquiry on your file, which may cause a small, temporary dip. However, reducing the number of active debts and making consistent repayments on the consolidation loan should improve your score over time.

Q: How quickly can a consolidation loan be approved?

At Quick Loans, every application is assessed by a real person — not a computer. You can expect to hear back within 60 minutes during business hours, and if approved, your existing creditors are typically paid out within a few days.

Q: What if I cannot provide security for a consolidation loan?

Unsecured consolidation loans are available for smaller amounts, though the interest rate will be higher than a secured option. Talk to the Quick Loans team to discuss what works for your situation.