Consolidation Loans – The Complete definition

Consolidation loans are a method of reducing your existing personal debt with the benefit of having one monthly installment that's affordable at the lowest interest rate.

So you have multiple credits that you pay every month and looking for a way to pay them faster, without affecting your credit score?

Consolidation loans are created to simplify your credit life and offer you the opportunity to save on personal loans.

For your financial freedom goals, today I want to show you exactly how personal loan consolidation works.

What are Consolidation Loans?

Consolidation loans offer a number of financial benefits to help customers with the financial freedom they deserve.

It’s a method of reducing your personal debt by applying for single credit to consolidate all the existing ones. With the benefit of having one monthly installment that’s affordable at the lowest interest rate.

And there are two types of consolidation loans, i.e. secured and unsecured loans.

You’ll qualify for the unsecured consolidation just with your credit score rating and affordability assessments. While the secured consolidations require collateral or assets to qualify for the loan.

Secured consolidations are obviously quick to qualify and get approved for while unsecured may take some time to consider your application. Also to note that unsecured loans may be offered at a higher interest rate than the secured consolidation loans.

What’s Needed to Qualify for the loan?

First thing, you must have multiple credits and existing debt to qualify for loan consolidation opportunities.

Second, you must meet the following loan qualification criteria:

The next step lenders usually take is to conduct affordability assessments on your credit profile. And of course, the reason you want a consolidation loan is to centralize your debt and have one affordable installment.

Where to Apply for Consolidation Loans

Major banks and lending institutions in South Africa offer consolidation loans.

The first place to try is with your existing bank. You trust and have a great relationship with them, hence it’s much easier with them than with other lenders.

Alternatively, try the following lenders for affordable credit solutions:

  • Direct Axis
  • African Bank
  • Nedbank
  • Old Mutual

Loan Consolidation Calculator

This is the most important step when applying for debt consolidation loans.

Knowing how much the centralized loan is going to cost you.

What if the loan consolidation will cost you more than the combined existing debt?

Use the following loan calculator to quickly estimate the costs for a loan.

Est. Installments