How does debt consolidation work?

How does debt consolidation workWhat is debt consolidation?

Debt consolidation works by combining all of the borrower’s debt into one simple loan.  Instead of paying many organisations different amounts plus varying interest rates the borrower will pay one financial organisation.

Applying for a debt consolidation loan

Applying for a debt consolidation loan will require the borrower to complete an online application with a list of all of their income, expenses, assets and debts.  Once the application has been received a credit check is completed, and the application is assessed.

If the loan is approved, the borrower will accept, agree and electronically or physically sign the personal loan contract.  The loan is usually paid out on the same day directly to the third party organisations to make it as easy as possible for the borrower.

When debt consolidation works well

Understanding how debt consolidation programs work is key to using them to your advantage. Debt consolidation programs only work if the borrower can change their spending habits.  The main reason a debt consolidation loan has happened is that the borrower has lived beyond their means.  The borrower will need to create a more disciplined approach to spending.

Healthy spending habits

Many people find that they tend to overspend if they have a credit card.  It becomes too easy just to buy things.   With a debt consolidation loan, it is recommended that people destroy their credit card, so they are not tempted to spend.  With the right budgeting tools and creating healthy spending habits this is possible.

Once the debt consolidation loan is in place, the borrower has the opportunity to structure their account and put funds in different accounts for various outgoings, and the funds are available when needed.  The team at NZCU South work alongside members to help them define their short, medium and long-term goals to help them start their journey to financial freedom.

Try our debt consolidation calculator to see how much you could afford or how much you could save with NZCU South.




Interest Rate



36 month(s)

Your repayments could be as low as*:

$0 per

0 Repayments
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* Please note the calculations provided are estimates only, and do not constitute a quote; actual rates, fees and repayments may differ from those shown here.

Home owner [or NZCU South mortgage customer] personal loan rates from 9.95% p.a. Non-home owner [or Non-mortgage customers] rates from 13.95% p.a. Important terms and conditions, including lending criteria, fees and charges apply.  Minimum loan value $5,000. Finance provided by Credit Union South, trading as NZCU South.  Other rates available on request.


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For more information on how debt consolidation works or to apply for an NZCU South Debt Consolidation Loan:

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0800 Lend2U (0800 536 328)

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