Should I Consolidate My Debt?
Add all your debts, enter a consolidation loan offer, and get a clear YES / MAYBE / NO verdict with the exact rand savings and months gained.
Your Current Debts
3 debtsTotal cost: R 33 908 incl. interest
Total cost: R 78 649 incl. interest
Total cost: R 9 961 incl. interest
Consolidation Loan Offer
Typical range: 14–24%
NCA cap R1,207.50
Accelerate payoff above minimum
Results update automatically as you type
Should You Consolidate?
MAYBE
Consolidation saves R 859 in interest but fees or rate may reduce the benefit. Review carefully.
Interest Saved
R 859
total
Months Saved
0
sooner debt-free
Monthly Payment
R 2 047,75
save R 619,97/mo
Break-even Month
Month 2
Aug 2026
Compare consolidation loan offers
Full Comparison: Current vs Consolidated
| Metric | Current (All Debts) | Avalanche Method | Consolidated |
|---|---|---|---|
| Total Balance | R 83 000 | R 83 000 | R 84 207 |
| Monthly Payment | R 2 667,72 | R 2 667,72 | R 2 047,75 |
| Total Interest | R 39 518 | R 35 002 | R 38 658 |
| Total Cost | R 122 518 | R 118 002 | R 122 865 |
| Payoff (months) | 60 months | 45 months | 60 months |
| Payoff Date | Jun 2031 | Mar 2030 | Jun 2031 |
| Blended / Effective Rate | 20.19% | 20.19% | 16% |
Avalanche = pay minimums on all, direct spare cash to highest-rate debt first (mathematically optimal without consolidation).
Per-Debt Breakdown
| Debt | Balance | Rate | Monthly PMT | Total Interest | Total Cost | Payoff |
|---|---|---|---|---|---|---|
| Credit Card | R 25 000 | 21% | R 941,88 | R 8 908 | R 33 908 | 36 mo |
| Personal Loan | R 50 000 | 19.5% | R 1 310,82 | R 28 649 | R 78 649 | 60 mo |
| Store Account | R 8 000 | 22% | R 415,03 | R 1 961 | R 9 961 | 24 mo |
| Total | R 83 000 | 20.19% blended | R 2 667,72 | R 39 518 | R 122 518 | 60 mo |
Debt Repayment Strategies Compared
Four scientifically-ranked approaches for South African consumers
Avalanche Method
Highest rate first
- ✔ Lowest total interest paid
- ✔ Mathematically optimal
- ✔ Works without a new loan
- ✘ Slower visible wins early on
- ✘ Requires payment discipline
Best for: Savers who want to minimise cost
Snowball Method
Smallest balance first
- ✔ Quick psychological wins
- ✔ Reduces number of payments fast
- ✔ Builds momentum
- ✘ Pays more total interest than avalanche
- ✘ Not mathematically optimal
Best for: People who need motivation milestones
Consolidation
Single lower-rate loan
- ✔ One simple monthly payment
- ✔ Can reduce total interest
- ✔ Frees up cash flow
- ✘ Requires credit approval
- ✘ Initiation fee eats early savings
- ✘ May extend total term
Best for: Multiple high-rate debts, stable income
Debt Review
NCA-regulated restructure
- ✔ Legal protection from creditors
- ✔ Lowest restructured rates (0–5%)
- ✔ Affordable payments
- ✘ Bureau flag while active
- ✘ No new credit during process
- ✘ Takes years to exit
Best for: Over-indebted consumers who cannot repay
South African Consolidation Rules (NCA)
- 📋 NCA Section 81: Lenders must conduct an affordability assessment before approving a consolidation loan.
- 💰 Initiation fee cap: R1,207.50 (NCA) for personal consolidation loans.
- 📊 Service fee cap: R69/month on personal loan accounts.
- 🔢 Maximum rate (2025): Repo + 21% = ~29.25% for unsecured personal loans.
- ⚖️ Credit life insurance: May be bundled — check your quote for compulsory CCI premiums.
- 🏦 Secured vs unsecured: Home equity (access bond) consolidation typically offers the lowest rate.
Typical Debt Rates vs Consolidation Rates (2025)
| Debt Type | Typical Rate | Consolidation Rate | Annual Saving per R50k | Worth Consolidating? |
|---|---|---|---|---|
| Credit Card / Store Card | 21–24% | 14–18% | R3,500–R5,000 | ✅ Yes |
| Clothing Account | 22–24% | 14–18% | R4,000–R5,000 | ✅ Yes |
| Payday Loan | 36–60% | 14–18% | R9,000–R21,000 | ✅ Strong yes |
| Personal Loan (high rate) | 22–27% | 14–18% | R4,000–R6,500 | ✅ Yes |
| Personal Loan (competitive) | 17–21% | 14–18% | R0–R1,500 | ⚠️ Maybe |
| Vehicle Finance | 13–16% | 14–18% | -R500–R1,500 | ❌ No |
| Home Loan (bond) | 11–13% | 14–18% | -R1,500–R3,500 | ❌ No |
| Access Bond Draw-down | 11–13% | 11–13% | Varies | ✅ Best option |
Savings assume 60-month consolidation loan. Actual savings depend on your specific rates and term.
Debt Consolidation Cheat Sheet
📐 Key Formulas
- Monthly PMT: P × r × (1+r)ⁿ / [(1+r)ⁿ − 1]
- Total interest: (PMT × n) − Principal
- Blended rate: Σ(balance × rate) / total balance
- Break-even month: Initiation fee ÷ monthly saving
- Interest saved: Current total interest − consolidated total interest
✅ Consolidation Decision Rules
- ✔ Consolidation rate < blended current rate → potential saving
- ✔ You plan to keep the loan longer than break-even month
- ✔ You will close the consolidated accounts (prevent re-spending)
- ✘ Don't consolidate secured loans (vehicle, bond) into unsecured
- ✘ Don't consolidate if extending the term neutralises savings
- ✘ Don't consolidate if you can't control spending on freed-up credit
⚡ Quick Wins Before Applying
- 1Close any accounts you plan to consolidate — do NOT keep them open
- 2Get your credit report (free via Experian / TransUnion / ClearScore)
- 3Dispute any incorrect adverse listings before applying
- 4Avoid applying for new credit for 3 months before the consolidation application
- 5Compare at least 3 lender offers — rates vary by 4–8% for the same applicant
- 6Ask for a settlement quote letter from each creditor for accurate amounts
🚩 Red Flags to Watch For
- 🚩 Fee upfront: Reputable lenders deduct fees from loan, never charge upfront
- 🚩 No affordability check: NCA requires lenders to assess your income
- 🚩 Rate not stated: Must receive a pre-agreement quote with APR disclosed
- 🚩 Very long term: 84–120 month terms can negate all interest savings
- 🚩 Insurance bundled in: CCI can add 2–5% to effective cost — check separately
- 🚩 Balloon payment: Some consolidation products include residuals — always confirm
Frequently Asked Questions
Q: Does consolidating debt hurt my credit score?
Applying for a consolidation loan creates a hard enquiry which may lower your score by 5–15 points temporarily. However, if you close the consolidated accounts and repay consistently, your score typically recovers and improves within 6–12 months.
Q: Can I consolidate debt while under debt review?
No. While under debt review you cannot access new credit. You must fully exit debt review (Form 17.W issued) before applying for a consolidation loan.
Q: What is the difference between a consolidation loan and refinancing?
Consolidation combines multiple debts into one new loan. Refinancing replaces a single existing loan with a new loan (usually at a better rate). Both can save interest, but consolidation specifically addresses multiple debt accounts.
Q: Can I use my home loan (access bond) to consolidate?
Yes — accessing equity in your home is the cheapest consolidation option (prime + 0–2% vs prime + 10–21% for personal loans). However, you are converting unsecured debt into secured debt backed by your home, which increases foreclosure risk.
Q: How does the avalanche method compare to consolidation?
The avalanche method (highest rate first) is mathematically as effective as consolidation when you have the same total monthly budget. Consolidation is better when it genuinely reduces your blended interest rate. This calculator shows both side-by-side so you can compare directly.
Ready to Consolidate?
Compare consolidation loan offers from multiple NCR-registered providers. Get a rate-match quote and see exactly how much you save.
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