Debt consolidation is a common refinancing process where you take out one loan to pay off some or all your existing debts. For instance, instead of paying four different debts with four different monthly repayments, account fees, and interest rates, you can combine all of them into one and yield a lower interest rate through a debt consolidation loan.

With OneDebt, you can consolidate your unsecured debts. These could be things like personal loans and credit cards, as well as car loans, student loans, medical loans and more.

Taking out a debt consolidation loan can help you with the following:

Manage payments easier. Having only one payment to think about helps you better manage your budget rather than handling multiple debt repayments each month.

Save on interests and other charges. Consolidating your debts into simple, low rate personal loan could potentially help you save money since you will not be dealing with multiple fees, such as interest, monthly fees and other charges.

Set a definite loan term. Unsecured personal loans have a fixed term. So if you are opting for an unsecured personal loan to consolidate your debts, you can have a goal to work towards paying off your debt with a definite end-date.

Multiple applications of credit within a short period, such as debt consolidation loans, could negatively affect your credit score. But if the debt consolidation loan has lower monthly repayments, you may be able to pay it off more easily, and therefore may help improve your credit score over time.

To consolidate your debts, you can take out an unsecured personal loan with online lenders such as OneDebt or opt for refinancing where you take out a new mortgage to repay your existing loans.

Simplified repayment process. From managing many payments to many creditors, debt consolidation makes it easier by allowing you to make only one payment to one creditor each month. This method can significantly reduce any worries and simplify your repayments.

Same-day funds. Online lenders like OneDebt offers a same-day unsecured personal loan to help you catch up and consolidate your debts sooner.

Get in control of your finances. Consolidating your personal loans and credit card debts with OneDebt can get you back on track and on top of your finances which may help you focus on other financial goals, such as homeownership, retirement and more.

To qualify for a debt consolidation loan, you’ll have to meet your prospective lender’s minimum requirements. Most of the online lenders like OneDebt need the applicants to be at least 18 years old, a citizen or a resident in Australia and has a regular income, but the requirements may vary from one lender to another.

You may apply with online lenders or any major banks in Australia. Most of them offer unsecured personal loans that can be used for the purpose of debt consolidation.

Before applying for a loan to consolidate your debts, make sure to check a few things to make the process go smoothly.

Use a loan calculator. This is so you’ll get an idea of the loan amount and duration suitable for your personal circumstance. By using a loan calculator, you’ll have a better picture of how much you are likely to pay weekly, fortnightly or monthly including the interest rate, establishment fees and other charges.

Comparison rate vs interest rate. When you are doing your homework to determine what personal loan is best for you to consolidate your debt, reviewing the comparison rate versus the interest rate is important. Whilst the interest rate is the rate in which you are charged for borrowing the money, the comparison rate is designed so you can easily compare the true cost of one loan versus another. The comparison rate is calculated by combining the interest rate of the loan with other fees, charges and costs associated with the loan such as the establishment fees, monthly account fees, and early exit fees.

Check your credit history. Your prospective lender may review your credit history as part of their loan assessment, so make sure that your credit history is accurate. Reviewing your credit history is also a way to discover any potential setbacks prior to applying for a loan to consolidate your debts.

Prepare your requirements. Depending on the loan provider, they may ask you to submit supporting documents such as employment details, a copy of your bank statements and some details about your living expenses. Make sure to check with your lender and prepare these documents beforehand.

If you take out a debt consolidation loan, you may increase your overall debt should you fail to make your repayments. You may also be required to pay for incurred fees and charges for paying off your existing loans earlier or later.

Yes, consolidating your debts by paying them off with one low rate personal loan could potentially save you money. This holds true provided that the personal loan you are offered has a lower interest rate and fees, as compared to paying multiple fees across multiple debts.

The associated fees depend on the finance option you choose for your debt consolidation. If you’re opting for an unsecured personal loan, your repayments will likely include an interest rate, monthly service fee and establishment fee. OneDebt offers $0 early exit fee, but some lenders charge early termination fees and late payment fees, so it really pays to check the fees that come with your debt consolidation loan before applying.

Your loan provider may give you the option to pay for your debt consolidation loan on a weekly, fortnightly or monthly basis, and you can choose to have the payments directly debited to your account. The payment amount you will make on your loan will differ depending on your loan provider. If it is a fixed rate personal loan, you may choose to increase your repayment amount or make additional payments to finish off your loan earlier than your original loan term.

If you’re having difficulty making payments on time, the best thing to do is to contact your lender and explain your situation. Some lenders may allow a grace period where they waive extra charges such as late fees and increased interest rates.

If your loan provider is open for negotiations, be sure to inform them that you will not be able to make payments a few weeks or days before your due date. Otherwise, your one late payment for your debt consolidation loan may result in an increased monthly payment amount on your succeeding repayments.