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Should You Use a Personal Loan to Consolidate Debt?
Posted May 1, 2026
Should You Use a Personal Loan to Consolidate Debt?
Debt can build up fast.
A few credit cards, buy-now-pay-later payments, overdue bills, or small loans can turn into multiple repayments hitting your account every week.
A personal loan can sometimes be used to combine those debts into one repayment.
But is it actually a good idea?
What Is Debt Consolidation?
Debt consolidation means combining multiple debts into one personal loan.
Instead of paying several lenders, you make one repayment.
People often use it to combine:
Credit cards
Store finance
Buy-now-pay-later debt
Small personal loans
Overdrafts
Why People Consolidate Debt
Most people do it because they want things simpler.
One repayment is easier to manage than five.
It can also help if:
Payments are getting hard to keep track of
Interest rates are high
You want a clearer plan to pay debt off
You are missing payments or falling behind
When It Can Make Sense
Debt consolidation can work well if you already have debt and want to organise it better.
It may suit you if:
You have multiple repayments
You want one payment instead of several
You have steady income
You want a clearer way to get on top of debt
Things To Watch Out For
Debt consolidation is not a reset button.
It only works if you stop adding more debt afterwards.
Before applying, ask yourself:
Can I comfortably afford repayments?
Am I borrowing only what I need?
Will I stop using credit cards after consolidating?
Final Thoughts
A personal loan for debt consolidation can make life simpler.
One repayment, one due date, and a clearer plan.
But it only works if it helps you move forward — not fall back into the same cycle.
If you are unsure what your options look like, talking to a broker can help you understand what may be available.
Need Help?
At Smart Loans, we help Kiwis explore personal loan options based on their situation.
If you want to simplify your repayments, get in touch with our team today.