Debt Consolidation Loan Interest Rates in Australia
Juggling several debts at different interest rates turns a simple budget into a monthly puzzle. Credit card balances sitting at 18 per cent or more, a personal loan with its own repayment date, maybe a car loan on top. Plenty of Australian households feel like they are paying a lot and getting nowhere.
A debt consolidation loan rolls those debts into one loan, with one interest rate and one repayment. Whether that actually saves money, or just moves the problem around, comes down to two numbers: the rate you are offered, and how long you take to repay. This guide covers current rate ranges in Australia, what pushes your rate up or down, and what to check before you sign.
Key takeaways
- Advertised rates start from about 5.67 per cent p.a., but the average borrower actually pays closer to 17.95 per cent p.a.
- Your credit score band is the single biggest factor in the rate you are offered.
- Secured loans are generally cheaper than unsecured ones, because the lender can sell the asset if you fall behind.
- A lower rate over a longer term can cost more in total. The term matters as much as the rate.
- Australia has no rate shopping window. Several applications in a short period count against you, so compare before you apply.
Current Debt Consolidation Rates in Australia
Debt consolidation rates currently run from roughly 5.67 per cent p.a. at the low end to above 25 per cent p.a. for higher risk unsecured borrowing. Fixed rate loans start from about 5.67 per cent p.a., with comparison rates from 6.10 per cent p.a. Variable rate loans begin around 6.24 per cent p.a., with comparison rates from 6.95 per cent p.a.
| Loan type | Lowest advertised rate | Lowest comparison rate |
|---|---|---|
| Fixed rate | 5.67% p.a. | 6.10% p.a. |
| Variable rate | 6.24% p.a. | 6.95% p.a. |
| Secured | 5.67% p.a. | 6.10% p.a. |
| Unsecured | 5.94% p.a. | 5.94% p.a. |
| Bad credit | 16.99% p.a. | 17.01% p.a. |
Advertised rates are the floor, not the forecast
Those headline numbers are reserved for borrowers with excellent credit and strong financial profiles. Across actual applications, the average rate paid on a debt consolidation loan is around 17.95 per cent p.a., slightly above the 16.36 per cent average across all personal loan purposes.
That still beats the 18 per cent and up that many Australians pay on a revolving credit card balance, which is exactly why consolidation appeals to so many households. Comparison rates quoted by lenders are typically based on an unsecured $30,000 loan over 60 months, so your own comparison rate will differ.
| Credit profile | Typical rate range |
|---|---|
| Excellent credit | 5.67% to 6.24% p.a. |
| Average credit | Roughly 14% to 20% p.a. |
| Bad credit | From 16.99% p.a., often above 25% p.a. |
What Affects the Rate You Are Offered
Your credit score does most of the work, but it is not the only thing a lender prices. On the Equifax scale, which runs from 0 to 1,200, the bands break down like this.
| Equifax band | Score range | Effect on your rate |
|---|---|---|
| Excellent | 853 to 1,200 | Access to the lowest advertised rates |
| Very good | 735 to 852 | Typically 2 to 3 per cent higher |
| Good | 661 to 734 | Around 5 to 6 per cent higher |
| Average | 460 to 660 | Around 8 to 9 per cent higher |
| Below average | 0 to 459 | Limited choice, often 20 to 25 per cent p.a. and up |
The other levers
What else a lender prices
Secured or unsecured. A loan backed by a car or another asset carries less risk for the lender, so it is usually priced lower. The trade off is that the asset is on the line if you fall behind.
Income stability and employment history. Steady PAYG income in the same role reads very differently from three months of casual shifts, even at the same annual figure.
Debt to income ratio. The share of your income already committed to repayments. The lower it is when you apply, the better your position.
Loan term. Shorter terms sometimes attract slightly better pricing, and they always cost less in total interest.
Loan size. Some lenders price smaller loans higher, and some will not write a consolidation loan below a minimum amount at all.
How to Secure a Better Rate
Getting a better rate starts with knowing exactly where you stand before you apply, rather than accepting whatever lands in your inbox first.
- Pull your credit report. You can get a free copy every three months from each of the main credit reporting bodies, Equifax and Experian. Each may hold different information, so check both.
- Fix the errors. Incorrect defaults, debts that are not yours and old addresses all drag on a score. Correcting them is free and the reporting body has to investigate.
- Pay down what you can first. A lower debt to income ratio at the point of application genuinely improves your pricing, not just your chances.
- Compare before you apply, not by applying. Ask lenders for indicative pricing or work through a broker. See the warning below on why this matters in Australia.
- Consider security. If you have an asset you are comfortable offering, a secured loan will usually beat an unsecured one on rate. Weigh the saving against the risk to the asset.
Australia has no rate shopping window
In some countries, multiple credit enquiries inside a short window are bundled together and treated as one for scoring purposes. That is not how it works here. In Australia every credit application is recorded on your file whether or not you are approved, and several applications clustered in a short period are read by credit reporting bodies as a risk signal. Lenders looking at your file later may also read them as earlier knockbacks.
So the order matters. Compare first, apply once.
This is also where working with a broker earns its keep. Everest Home Loans has more than 50 lenders on panel, which means we can match your income, employment and credit situation against a far wider pool of options than you would reach going bank to bank, and do the comparing without putting a line of applications on your credit file. For clients who would rather talk it through in their own language, including the families who come to us as a Nepali speaking mortgage broker, that turns a confusing rate hunt into a clear decision. You can also run the numbers yourself first with our loan comparison calculator.
Should You Consolidate Into Your Home Loan?
Folding debt into your home loan lowers the interest rate on paper, and it usually lowers the monthly repayment too. It can still cost you more overall, because a mortgage runs for 25 or 30 years while a credit card or personal loan would have been cleared in four or five.
ASIC's MoneySmart puts the effect plainly. Here is what a $20,000 debt costs in total across three different terms, each at a lower rate than the last.
| Loan term | Interest rate | Total repaid on $20,000 |
|---|---|---|
| 5 years | 10% p.a. | $25,496 |
| 10 years | 8% p.a. | $29,119 |
| 15 years | 6% p.a. | $30,379 |
A lower rate does not automatically mean a cheaper loan. How long you carry the debt matters as much as the rate attached to it.
Unsecured debt becomes secured debt
This is the part that gets skipped. A credit card is unsecured. Roll it into your mortgage and it is now secured against your home. If repayments become a problem later, the lender can sell the property to recover the debt. MoneySmart's guidance is to consider every other option before using your home or other assets as security.
There is a second trap. If consolidating pushes your loan above 80 per cent of the property value, you may trigger lenders mortgage insurance, which can wipe out the interest saving on its own.
When it does make sense
Consolidating into a mortgage can work well where you keep the repayment high rather than letting it drop to the new minimum. If you refinance $20,000 of card debt into your home loan and then keep paying what you were paying before, you get the lower rate without the longer term. An offset account or redraw can do similar work. The discipline is the whole trick, and it is worth being honest with yourself about whether it will hold.
Our loan repayment calculator will show you what the total cost looks like either way before you commit to anything.
What to Check Before You Sign
- Every fee, in writing. Application, establishment, legal, valuation and ongoing monthly fees. Ask for the full list rather than the rate alone.
- Exit costs on the loans you are closing. Early repayment penalties on an existing personal or car loan can eat into the saving.
- Break costs on a fixed rate. If you are refinancing a fixed home loan, the break cost can be substantial and is calculated at the time, not quoted in advance.
- Whether the cards actually close. Consolidating a card and then running the balance back up is the most common way this goes wrong. Many lenders require closure as a condition. Treat it as one either way.
- Fixed or variable, and the full term. Check the repayment amount, the term, and any penalty for paying the loan out early.
- The licence of whoever you are dealing with. Only deal with a licensed credit provider or credit representative. Walk away from anyone who asks you to sign blank documents, rushes you, or will not put the interest rate and costs in writing. Licences can be checked on ASIC's professional registers.
If repayments are already unmanageable
Consolidation is a tool for debt you can service, not a fix for debt you cannot. If you are behind on repayments now, free financial counselling is available through the National Debt Helpline on 1800 007 007. It costs nothing and it is independent of any lender. Speaking to them first does not stop you consolidating later.
The Takeaway
Debt consolidation rates in Australia span a very wide range, from around 5.67 per cent p.a. for well qualified secured borrowers to above 25 per cent p.a. for higher risk unsecured applicants. Where you land depends on your credit profile, whether the loan is secured, the term you choose and the lenders you actually compare.
So check your credit report first, compare before you apply rather than by applying, and judge the offers on total cost over the full term rather than on the monthly repayment. If you would like help working through it in English, Nepali or Hindi, we are happy to look at it with you.
Find out what consolidating would actually cost you
Everest Home Loans works with families across Melbourne, Sydney, Perth, Brisbane and Adelaide. We will compare the options properly before anything touches your credit file.
Book a free consultation Call 0431 790 889- Compare more than 50 lenders against your own income and credit profile
- Model the total cost over the full term, not just the monthly repayment
- Work out whether a standalone loan or a mortgage restructure fits better
- Check the fees, break costs and exit costs before you commit
- Talk it through in English, Nepali or Hindi
Email: raj@everesthomeloans.com.au
Office: 35 Captain Pearson Drive, Mickleham VIC 3064
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Frequently Asked Questions
Does applying for a debt consolidation loan hurt your credit score?
Applying creates an enquiry on your credit file, which can cause a small dip. Unlike some overseas systems, Australia has no rate shopping window, so several applications inside a short period are not bundled together. They are recorded separately and read as a risk signal.
Compare options first and apply once. Over the longer term, consistent on time repayments on the consolidated loan usually help rebuild the score.
What credit score do you need for the best debt consolidation rates?
The lowest advertised rates generally go to excellent credit, around 853 to 1,200 on the Equifax scale. Score alone is not everything. Lenders also weigh income stability, employment history and your debt to income ratio, so a slightly lower score paired with steady income can still produce a competitive offer.
The same levers that improve your borrowing capacity work here too.
Is a secured or unsecured debt consolidation loan cheaper?
Secured loans backed by an asset such as a car are generally cheaper, because the lender holds collateral and carries less risk. The trade off is real. If you fall behind, the asset can be sold to recover the debt. Weigh the rate saving against that exposure rather than taking the cheaper number automatically.
How much can you actually save by consolidating?
It depends entirely on your starting rates and the term you choose. Take $7,000 of credit card debt at 18 per cent and $3,000 of personal loan debt at 15 per cent, both repaid over four years. That is about $289 a month and roughly $3,878 in interest.
Consolidate the same $10,000 into one loan at 14 per cent over four years and it is about $273 a month and roughly $3,117 in interest, a saving of about $761.
Stretch that same consolidated loan to seven years instead and the repayment drops to about $187 a month, but the interest rises to roughly $5,742. That is about $1,864 more than leaving the debts alone. Same rate, same balance, different term.
Can I consolidate debt into my home loan?
Usually yes, through a refinance, subject to your equity and the lender's policy. It lowers the rate and the monthly repayment, but it converts unsecured debt into debt secured against your home, and it stretches the repayment across the remaining mortgage term.
If it pushes your loan above 80 per cent of the property value you may also trigger lenders mortgage insurance. It works best when you keep the repayment at its old level rather than dropping to the new minimum.
What if I have bad credit or a default on my file?
Consolidation is still possible, but pricing starts around 16.99 per cent p.a. and can run above 25 per cent p.a. At those rates consolidation may not save anything over the debts you already hold, so the arithmetic has to be checked case by case rather than assumed.
A default stays on your report for five years, and paying it does not remove the listing, though it will show as paid. If repayments are already unmanageable, free financial counselling through the National Debt Helpline on 1800 007 007 is the better first call.
Sources
- Money.com.au, Debt Consolidation Loans and Rates Comparison Australia, updated 23 October 2026. Advertised and comparison rates, average rate paid, Equifax score bands.
- ASIC MoneySmart, Debt consolidation and refinancing, updated 31 August 2026. Total cost by loan term, secured debt warning, fees to check, unlicensed firms.
- ASIC MoneySmart, Credit scores and credit reports. Free credit report access, default retention periods, what affects a score.
- Canstar, Do multiple loan applications affect my credit rating? Treatment of clustered credit enquiries in Australia.
- National Debt Helpline, 1800 007 007. Free, independent financial counselling.
This article is general information only and does not take your objectives, financial situation or needs into account. Interest rates, fees and lender policies change and the figures quoted were current at the date of publication. Worked examples are illustrations based on the stated rates and terms and assume no fees, no extra repayments and no change in rate. Consider whether the information is appropriate for you and seek your own advice before acting. Kandel & Co Pty Ltd trading as Everest Home Loans, ACR 506833. Rajesh Kandel, Authorised Credit Representative 476341 of Connective Credit Services Pty Ltd, ABN 77 161 731 111, Australian Credit Licence 389328.
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Kandel & Co Pty Ltd t/a Everest Home Loans is an Authorised Credit Representative – 506833, and Rajesh Kandel is an Authorised Credit Representative number – 476341 of Connective Credit Services Pty Ltd ABN 77 161 731 111 (Australian Credit Licence No.389328).
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