Are There Debt Consolidation Loans in Australia for Bad Credit?

A consolidation loan allows you to pay off all of your debts in one lump sum. The great thing about this loan is that it’s a lot cheaper than paying off multiple debts individually.

Unfortunately, though, getting approved for a consolidation loan can be difficult. However, with collateral, you can get many debt consolidation loans in Australia for bad credit. We’ll show you how to get approved for one, even if you have less-than-average credit.

First of all, let’s know more about debt consolidation loans. 

What this article covers:

How Does a Debt Consolidation Loan Work?

Debt consolidation loans combine many credit lines into a single loan. The goal of consolidating all of your debts is to make your budget better and your finances more manageable.

By consolidating payments into a single payment schedule with a single interest rate, debt consolidation loans may be helpful for those with poor credit. 

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Can I Get Debt Consolidation Loan Approval with Bad Credit?

The lender will decide whether to grant your no guarantor debt consolidation loan at its own discretion. They’ll determine the parameters of the loan, including the interest rates, the amount available, and the time frame for repayment.

However, with the right collateral, you’ll get a higher chance of approval, even with bad credit.

Why Apply for a Consolidation Loan

The following are the main benefits of a debt consolidation loan:

  • Convenience. It would be simpler for you to handle your loan because you’re consolidating all of your current obligations into a single loan. You don’t have to be concerned about failing to pay certain debts before the deadline.
  • Monthly Dues and a Fixed Term. Your monthly payment will often be divided into a predetermined amount by debt consolidation loans. You can also choose longer terms. Typically, you have 12, 24, or 36 months to repay your debt.
  • Low Interest Rate. There are debt consolidation loans in Australia that offer low interest rates. Always double-check whether or not you can get a better interest rate with the debt consolidation loan than the loans you have right now.
  • No Guarantor. Debt consolidation loans seldom have guarantors since lenders will rely on the collateral you’ll attach. So, bad credit debt consolidation loans have guaranteed approval with the right collateral.

How to Get Bad Credit Debt Consolidation Loan

The best kind of debt consolidation bad credit loan you may get is one that is secured. To obtain it, you’ll need to attach collateral.

Let’s briefly review the two types of loans in terms of collateral.

Unsecured Loan

This type of loan doesn’t need you to attach collateral. It’s because you’re simply taking out a little loan for a brief period, which poses little risk to lenders. 

However, they’ll probably look at your credit report. So, this is not the type of loan you should be looking for. 

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Secured Loan

As previously indicated, collateral is necessary for this kind of loan. The good news is that you’ll have a high approval rate and be able to borrow a higher amount at a low-interest rate. 

Even if you get a $50,000 debt consolidation loan, there’s a high possibility you’ll get approved. However, it depends on the value of the collateral you’ll attach.

If you default on your loan, though, you risk losing your collateral.

Also, it’s important to note that you can’t just attach any collateral. It must pass the lender’s examination to prove it’ll be enough to pay off the amount you owe them.

Basically, lenders won’t look at your credit history. So, acquiring a secured debt consolidation with bad credit loan is the best option for you.

Where to Get Bad Credit Debt Consolidation Loan

If you need money right now, several lenders in Australia provide bad credit debt consolidation loans. Finding the best one for you could be difficult, but you can rely on loan finders like Orange Loans.

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We have worked with thousands of lenders around Australia to serve a wide range of customers. The majority of our secured loan providers charge reasonable interest rates. Just make sure you have supporting documentation for your application.

The process is as simple as telling us how much you need to borrow, preparing the necessary documents, and completing the online application. Once we’ve identified a lender that can meet your demands, we’ll get back to you as soon as possible.

Managing Your Consolidation Loan

Make sure you have a strategy for handling your debt consolidation loan before you even seek one.

Add Your Existing Loans

To determine how much you’ll need:

  1. Add up all of the loans you presently have.
  2. Once everything is done, look for a reputable lender that can provide you with a bad credit debt consolidation loan for the requested amount.
  3. Make sure the interest rate is reasonable.

Compare several lenders to find which would be more advantageous for you.

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Pay Your Loans Immediately

Pay your current loans as soon as you have the money. If you put off paying off your present loans, you’ll be tempted to spend the money elsewhere. 

The longer you put off paying off your existing debts, the more interest will accumulate.

Enrol in Auto-Debit Payments

Once you’ve paid off your current loans, you’ll feel a bit relaxed. However, your current debt consolidation loan must still be repaid. 

You can enrol in an auto-debit plan to simplify the payment and stop worrying about it.

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Change Your Spending Habits

It would be best if you refrained from taking out new loans in the future now that you have used a debt consolidation loan to pay off your existing debt. 

Change the way you spend on things from now on. Prioritise your needs above your wants. Of course, as long as you have the money, you can always buy the items you want. 

Just be careful not to rely on other loans if you can’t afford to pay them back immediately. You’ll soon be drowning in debt. 

Conclusion

It’s important to remember that getting debt consolidation loans with bad credit in Australia can be challenging, but it doesn’t have to be impossible. 

Just make sure that you have collateral to attach, pay attention to the terms of your loan, and understand how much time you need to pay it back.

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