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Debt Consolidation

What is debt consolidation?

Debt consolidation is the process of combining all your debt, and taking all your individual monthly repayments and replacing it with one installment.

How does it work?

South African consumers have two major options when it comes to consolidating their debt. They can either apply for a consolidation loan, or choose to be placed under debt review, as set out in the National Credit Act (NCA)

Debt consolidation loan

A consolidation loan is basically one big loan to cover all your debt obligations. Here are a few points to note with regard to these loans:

  • You are actually just paying your old debt with new debt.
  • Consolidation loans are usually very expensive, as the interest rates are very high
  • You will have to pay an initiation fee on the consolidation loan.
  • If you are in arrears with any of your accounts, you will not be able to qualify for a consolidated loan. You need a clean credit record to apply for a consolidated loan.

Debt review consolidation

One of the best options for consolidating your debt is to use the NCR regulated process of debt review.

  • You still only pay one amount at month end.
  • Your interest rates are lowered.
  • Your term is extended.
  • Whilst paying only one lower monthly installment, your assets are protected from repossession and you are shielded from the harassment by debt collectors and creditors.

Thousands of South African consumers have become financially free by consolidating their debt via debt review. If a registered debt counsellor, like those employed by NDA consolidates your debt into one monthly lower installment, you are guaranteed a clean credit record and the chance to start over.


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